Desperate Dealers Selling Cars Below Cost
A truly great bargain offers an unforgettable experience. I still bask in the glow of getting a designer dress originally priced at over $400 for a mere $52 — and that was over four years ago. But ask anyone — male or female — to recall their all-time best bargain, and within seconds they’ll proudly describe the details of their steal. (In a quick, unscientific survey, four out of five men were able to tell me all about their “deal of a lifetime.” I’m willing to bet the fifth’s girlfriend must do all of the shopping.)
Surprisingly, or perhaps not so surprisingly in this economic climate, one man’s first response was “my house,” and another said “my car.” We’ve been hearing for a while that now is the time to act on a new home purchase if you can afford it. There’s a lot of inventory out there, and many sellers are willing to make a deal — not to mention foreclosure and short-sale bargains. Now it appears that car dealers are backed into the same “must-sell” corner and willing to do what it takes to move overstocked inventory, including selling cars for less than what they paid the factory.
According to MarketWatch, dealers “were selling about 25% of all 2009 model cars below cost” by March 2009.
While I have to appreciate the amazing deals that means for consumers, I also find it somewhat bittersweet. It’s certainly a huge advantage for car-shoppers to score a new car at such a discount, but it’s also another indication of the sad state of the economy. Dealers willing to lose money just to get cars off their lots present staggering economic implications.
When gasoline was priced over $4 per gallon last summer, Toyota dealers couldn’t keep their prized gasoline-electric hybrid Prius models in stock. Consumers were calling dibs before the cars even arrived on the lots and paid thousands over sticker price just to get behind the wheel of these fuel-saving machines. Fast-forward almost a year: Gas prices have dropped by 40 percent, the economy is ailing (to say the least), and those formerly coveted hybrids are sitting on lots with no where to go, even with the energy efficiency tax credits available.
I’d like to think it’s the economy — not apathy towards the environment following lowered gas prices — that’s stalled hybrid sales. But regardless of why, the facts remain the same: The cars simply aren’t selling.
And here’s an interesting illustration of supply and demand: Last July, eager car-buyers were paying up to $4,000 above sticker price to own a 2009 Prius. Today, you can get that same 2009 Prius for $4,000 BELOW dealer cost in some cases.
So if you’re able to cash in on incredible savings, it seems now is the time to do so. Be sure to head to the dealership educated and ready to negotiate, and you too could drive off with the deal of a lifetime.
