The impact of a slow economy has already been seen in the form of one automaker increasing its new-car incentives in an attempt to sell cars: Chrysler boosted its March incentives by 5% over February numbers. Incentives aren’t the only way automakers will adjust to the slow economy. Other automakers are taking different measures to move stagnant inventory, including decreasing vehicle production. Here are some thoughts from members of the Cars.com staff on the topic:
Patrick Olsen, editor in chief: While it’s always difficult to say for sure, over the last few years, automakers (especially the domestics) have offered pretty decent incentives in the summer months. They’re trying to keep pace with the “Friends and Family” pricing sales from a few years back. This year, with many people predicting a down economy, it’s possible that automakers may offer more rebates. They won’t want too much inventory to accumulate on lots across the country. That being said, several automakers have already cut their workforce and eliminated shifts at plants. It’s tough calculus to work out, but keep your eyes open. If things are going badly, especially in certain parts of the country, you might see some good deals.
Eamonn Brennan, assistant editor, incentives: Agreed, especially on trucks and SUV’s. Since I’ve worked at Cars.com, the top offers have uniformly been on trucks, followed by SUVs like the Chevy Avalanche and Tahoe.
As far as more incentives, I haven’t noticed that trend yet this year. If anything, the trend I’ve noticed is that automakers (GM especially) are creating national offers for two or three months at a time rather than for a month or shorter. What that means I’m not sure, but I would think a better strategy would be to decrease production. A happy medium might be a boost in incentives for 2007 models already on lots and a decrease for 2008 models still in production.
Mike Hanley, reviewer: I think you're going to see more decreases in production as opposed to increased incentive spending in 2008, as the domestics are less focused on market share and more focused on margins. Instead of running the factories full tilt just to keep workers busy, it's better for them to slow things down or cut shifts to keep production even with sales. Incentives will still be around, for sure, but I wouldn't expect the fire sales of a few summers ago.
Learn more
See if your question has already been asked and answered
Your question has been successfully submitted to Ask.cars.com. It will now be reviewed by our editors and we'll answer it soon if we think it's a useful question. You will be notified via e-mail when the answer is posted. Ask.cars.com tackles your questions about new cars and the car-buying process. Unfortunately we can't answer questions regarding:
Have our experts answer any of your questions about new cars.
Don't worry — we won't publish your last name or email.
