5 TIPS FOR SMARTER NEW CAR SHOPPING

by Joseph D. Younger
AAA of New York

This fall is shaping up as the best time to buy a new car in recent memory. Total 2008 sales are expected to drop more than 8 percent from 2007 with experts blaming $4-a-gallon gas, a slumping economy and the continuing credit crisis brought on by the subprime mortgage debacle. But bad news for the auto industry translates to good news for shoppers. How many different ways can you say “buyer’s market?”

“As everyone knows, the economy has taken a hit lately,” says Joe Stella, sales manager at Wantagh Mazda on Long Island. “Dealers are doing whatever they can do to sell cars.” Before you head for the showroom, though, take these moneysaving tips:

• Expect high demand for debutants. Carmakers have rolled out plenty of debut models in recent months, with even more on the way (see “New & Noteworthy”). Of course, nothing beats the cachet of having a car that no one else on your block has.
  
  But don’t expect to land a good deal on these never before seen ’09s and early ’10s, even in these tough economic times. “They can command a premium price—Manufacturer Suggested Retail Price or even higher,” says Paul Calisi of AAA’s Auto Buying Program which offers new vehicles at low, no-haggle, pre-negotiated prices exclusively to Club members. Generally, carmakers promote debut models heavily creating demand that exceeds supply until factories can ramp up production. You might even have a hard time finding the trim level or color you want. You’ll probably find a better price—and a better supply—for these fresh faces in a year or two when initial demand subsides.
  
  
  
• Consider leasing a redesigned ’09. More than two dozen models—including such perennial top-sellers as the Cadillac CTS, Chevrolet Malibu, Honda Accord, Mazda 6, Nissan Maxima, Mercedes CClass and Toyota Corolla—boast a complete redesign this year. If a low monthly payment appeals to you, leasing one of these machines represents a safe bet.
  
  Why? As newly redesigned models, they probably won’t see major changes for years. Consequently, they’ll have a particularly high residual value at the end of a three year lease— which usually translates to a lower monthly payment for you.
  
  
  
• Think seriously about a leftover ’08. As Calisi explains, “2008 models will have a more generous dealer discount and, in all probability, special incentives such as financing or rebates, so considering one of these models is a wise choice.” Stella agrees, noting that his Mazda dealership was offering zeropercent financing for 60 months on outgoing models.
  
  You might still find plenty of ’08s. Dealers work on a “turn-and-earn” basis; the more models they sell from the previous year, the larger their factory allocation for the next year. So dealers don’t mind carrying outgoing models on their inventory even if it means selling them at a deep discount.
  
  
  
• Make a long-term commitment to a lame duck. For some shoppers, a vehicle slated for extinction next year (such as Chrysler’s PT Cruiser) might look like a good deal because of the deep discounts available. But keep in mind that the vehicle’s resale or trade-in value will fall precipitously after its demise. If you plan to keep the car for five years or longer, the drop in value won’t matter much because “the future value of the vehicle will be based more on its condition and mileage than on the availability of that particular model,” explains Calisi. “On the other hand, if you intend to keep the vehicle four years or fewer you can mitigate the risk of reduced value by considering leasing rather than purchasing, thereby transferring the future financial risk to the lessor.”
  
  There’s one other caveat for buying a discontinued model. Carmakers often cut back production of certain versions in anticipation of the line’s demise making some trim levels hard to find.
  
  
  
• Forget the phone when comparing prices. After zeroing in on a particular model, many shoppers call four or five different dealers to ask for the best price. This represents one of the biggest mistakes in new-car shopping, says Stella. “Unfortunately, the car business has a reputation for being less than forthcoming,” he explains. “Instead of getting four or five prices, you’re likely to get four or five ‘homing devices’—unrealistically low figures aimed at drawing you into the dealership. When you get there, you find out the real price.”
  
  Instead, visit three dealerships a little outside your immediate area and collect their best prices. Armed with that information you can then visit the dealer in your neighborhood to begin negotiating in earnest.

© 2015 TLC Magazine Online, Inc.