Historically, when new vehicles are selling really well, used vehicles are not. Used vehicle sales go down and so do their values. Conversely, when new vehicles are selling well, you do not see a lot of incentives on them.
But right now, the used vehicle market is on fire. It continues to rise and avoided seasonal lows that we usually see in the winter months. And oddly, we are in the gasoline twilight zone…fuel-efficient car prices have not yet gone through the roof as they have in the past when gas gets to $3 per gallon, and large trucks and SUVs have showed no signs of going down. This is highly unusual. For me, it means the used market is SO good right now, that gas prices are not affecting them.
To make my case even stronger that it is a great time to buy, we saw incentive spending go up on new vehicles in April. Generally, this does not happen. We can thank the problems at Toyota for this phenomenon. They jacked incentives up in March due to the bad publicity from the recalls, and kept them on in April. The other manufacturers had no choice but to match or come really close. That’s just the car biz. It is also the only reason we have incredible incentives right now on new vehicles.
So let’s recap; we have an ultra-strong used car market which makes your trade value higher, and we have incredible incentives on new vehicles, making the new vehicle less expensive. That is the pure definition of a buyer’s market in the auto industry.
But if you are still not convinced, right now auto loan rates are running at an 8-year low. Last month, the average auto loan in this country was 4.4%, down from 5.8% in the same month of 2009. This decrease in interest rates shaves $20 per month off a normal $30,000 loan over 60 months.
And for those that want to lease, and don’t drive too many miles per year to do so, there are some smoking lease deals out there, and not just on the luxury cars, but mainstream cars and trucks as well. Generally, lease incentives are pretty well hidden, but Toyota has aided on this front too with near-zero interest on most of their leases, and many of the other automakers scrambled to follow suit.
So the bottom line here is, no matter if your goal is to your lower cost to buy, or to lower monthly payment, the timing is perfect. Many of you will be able to get a nicer vehicle than you normally would be able to afford.
But whatever your particular case is, vehicles cost less right now than they have in quite some time. And for consumers, especially those who tried to trade a year or so ago, look again. Things have changed, and they have changed to your advantage. Loans are getting easier to obtain as well.
April is the perfect storm for car buyers, we will see what May brings.
Jerry Reynolds is the Host of The Car Guy Show heard Saturdays 11-2 on News Radio 740 KTRH AM Jerry is a member of the Texas Auto writers Association. Jerry is the former Owner of a large chain of automobile dealerships. Jerry can be contacted at www.carguyshow.com