An Industry in Transition: Huge Incentives On New Vehicles May Be Disappearing

Automobile Staff
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Automakers may just be changing the way they sell new vehicles in the U.S.

As new vehicle inventories remain low, huge incentives are becoming increasingly difficult to find, even as the clearance of 2010 models begins. In July of this year, automakers had a 52-day supply of vehicles compared to 69 days in July 2008, according to J.D. Power and Associates. That news isn't positive for those holding out for year-end closeout sales.

"This may be as good as it gets, and get used to it," said Jeff Schuster, the executive director of forecasting for J.D. Power and Associates, to the Detroit News.

Many consumers may be waiting for huge incentives from American and other automakers but, aside from a few exceptions, prices haven't fallen dramatically.

The difference is especially pronounced for those who remember Cash for Clunkers rebates for new vehicles as high as $4500.

"Prices are high and the buyer is waiting," said Sean McAlinden, the chief economist of the Center for Automotive Research at a recent seminar.

It's unclear at this point whether automakers will budge, offering higher incentives or if consumers will simply accept a price closer to the MSRP. Currently, J.D. Power expects sales to fall around 11.6 million units this year. That's up from 10.4 million units in 2009 but far below recent years of 15-17 million units.

"Just lowering prices is not going to solve the problem," said George Pipas, Ford's top sales analyst, to the Detroit News. "The key is an improved consumer outlook."

Source: The Detroit News

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