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AUTO INDUSTRY CRISIS | It's a buyer's market, with a staggering array of incentives
Chrysler, looking to get rid of inventory while it's in bankruptcy, is offering five-year, no-interest loans on some models through July 1. The offer is an alternative to various $6,000 rebates it had been offering.
The loans are among several deals meant to draw customers and keep sales going during the auto industry's crisis.
» Click to enlarge image
Liquidation signs fill the windshields of new cars last month at a Dodge dealership in Portland, Ore.
(AP)
The loans are the first being offered to Chrysler buyers through GMAC, which took over financing duties from Chrysler Financial as part of Chrysler's government-backed bankruptcy filing. GMAC is receiving $4 billion of Treasury funds to support its new loans to Chrysler dealers and customers.
With 789 dealers targeted to be severed from the company, Chrysler already had the highest average incentive among automakers last month -- $4,159 per vehicle, according to auto research Web site Edmunds.com. Those targeted dealers, set to lose their franchises Tuesday, won't be able to take advantage of the new incentives.
GM ranked second in incentives at $3,783 per vehicle, while Honda raised its incentives to a record $1,626, according to Edmunds.com.
With the auto industry in turmoil and a president who favors auto-efficiency standards, car buyers are faced with a mind-boggling array of federal, local and dealer incentives.
For example, President Obama's 2009 economic stimulus package gives every taxpayer who buys a new car this year the ability to claim a deduction on their income taxes for the sales tax they paid. So if you buy a new car for $20,000 with a 6.5 percent sales tax rate, you will pay about $1,300 in taxes. You can reduce by $1,300 your taxable income when you pay your 2009 federal income taxes.
The deduction applies to new-car purchases after Feb. 16 and before Jan. 1, 2010. The deduction phases out for individual filers with adjusted gross income of $125,000 to $135,000, and joint filers whose gross income totals $250,000 to $260,000.
To research car-buying incentives, shoppers can review newspapers, find the information on car manufacturers' Web sites or go to Edmunds.com and search by ZIP code.
Hybrids and vehicles powered by diesel and natural gas qualify for federal tax credits, too. Yet car shoppers must keep their eyes peeled because some manufacturers have sold enough energy-efficient cars to phase out their eligibility for federal income-tax credits.
Toyota and Honda are already out of credits, but the rest of the brands that have diesel, electric, hybrid or compressed natural gas cars have credits available from $900 to $7,500, according to Edmunds.com spokesman Chintan Talati.
A buyer will get a $400 credit for every 25 percent improvement in efficiency their hybrid gets over the average car of its class and weight. The credit limit is $3,400. Vehicles that run on alternative fuels qualify for a credit of up to $4,000. Eligible fuels include propane, hydrogen, natural gas or any blend that's at least 85 percent methanol.
The newest vehicles, plug-in hybrids and fully electrical cars, are eligible for the maximum federal tax credit of $7,500.
Edmunds.com says premium sports cars have the highest average incentives, $6,865 per vehicle sold, followed by large SUVs at $4,267.
At Roseland Auto Sales at 10954 S. Michigan, a Pontiac Vibe had a $1,000 customer rebate, but that increased by $2,000, to $3,000 total, for a buyer who owned a GM vehicle. Or buyers could choose zero-percent financing for 60 months.
"Many people want the zero percent, but if you get a 5.1 or 5.2 percent interest rate [on the amount financed], and the finance rate is right, you're a little bit ahead," said Ken Andryske, general manager at the dealership, which will continue operating even though it is on GM's list for losing its franchise in 2010.
A Pontiac Torrent offered $500 cash back plus zero-percent financing for up to 60 months, or a $1,500 customer rebate and $2,000 credit for being an existing GM owner.
If you're driving a beater, you might want to wait until Congress acts on a "cash for clunkers" program in which electronic vouchers that knock off as much as $4,500 from the price of a new car purchase would be given to those who scrap their old cars. The bill may be taken up this week. Congressional Democrats are considering fast-tracking the legislation to a must-pass war spending bill, Reuters says.
Chrysler, looking to get rid of inventory while it's in bankruptcy, is offering five-year, no-interest loans on some models through July 1. The offer is an alternative to various $6,000 rebates it had been offering.
The loans are among several deals meant to draw customers and keep sales going during the auto industry's crisis.
» Click to enlarge image
Liquidation signs fill the windshields of new cars last month at a Dodge dealership in Portland, Ore. (AP)
The loans are the first being offered to Chrysler buyers through GMAC, which took over financing duties from Chrysler Financial as part of Chrysler's government-backed bankruptcy filing. GMAC is receiving $4 billion of Treasury funds to support its new loans to Chrysler dealers and customers.
With 789 dealers targeted to be severed from the company, Chrysler already had the highest average incentive among automakers last month -- $4,159 per vehicle, according to auto research Web site Edmunds.com. Those targeted dealers, set to lose their franchises Tuesday, won't be able to take advantage of the new incentives.
GM ranked second in incentives at $3,783 per vehicle, while Honda raised its incentives to a record $1,626, according to Edmunds.com.
With the auto industry in turmoil and a president who favors auto-efficiency standards, car buyers are faced with a mind-boggling array of federal, local and dealer incentives.
For example, President Obama's 2009 economic stimulus package gives every taxpayer who buys a new car this year the ability to claim a deduction on their income taxes for the sales tax they paid. So if you buy a new car for $20,000 with a 6.5 percent sales tax rate, you will pay about $1,300 in taxes. You can reduce by $1,300 your taxable income when you pay your 2009 federal income taxes.
The deduction applies to new-car purchases after Feb. 16 and before Jan. 1, 2010. The deduction phases out for individual filers with adjusted gross income of $125,000 to $135,000, and joint filers whose gross income totals $250,000 to $260,000.
To research car-buying incentives, shoppers can review newspapers, find the information on car manufacturers' Web sites or go to Edmunds.com and search by ZIP code.
Hybrids and vehicles powered by diesel and natural gas qualify for federal tax credits, too. Yet car shoppers must keep their eyes peeled because some manufacturers have sold enough energy-efficient cars to phase out their eligibility for federal income-tax credits.
Toyota and Honda are already out of credits, but the rest of the brands that have diesel, electric, hybrid or compressed natural gas cars have credits available from $900 to $7,500, according to Edmunds.com spokesman Chintan Talati.
A buyer will get a $400 credit for every 25 percent improvement in efficiency their hybrid gets over the average car of its class and weight. The credit limit is $3,400. Vehicles that run on alternative fuels qualify for a credit of up to $4,000. Eligible fuels include propane, hydrogen, natural gas or any blend that's at least 85 percent methanol.
The newest vehicles, plug-in hybrids and fully electrical cars, are eligible for the maximum federal tax credit of $7,500.
Edmunds.com says premium sports cars have the highest average incentives, $6,865 per vehicle sold, followed by large SUVs at $4,267.
At Roseland Auto Sales at 10954 S. Michigan, a Pontiac Vibe had a $1,000 customer rebate, but that increased by $2,000, to $3,000 total, for a buyer who owned a GM vehicle. Or buyers could choose zero-percent financing for 60 months.
"Many people want the zero percent, but if you get a 5.1 or 5.2 percent interest rate [on the amount financed], and the finance rate is right, you're a little bit ahead," said Ken Andryske, general manager at the dealership, which will continue operating even though it is on GM's list for losing its franchise in 2010.
A Pontiac Torrent offered $500 cash back plus zero-percent financing for up to 60 months, or a $1,500 customer rebate and $2,000 credit for being an existing GM owner.
If you're driving a beater, you might want to wait until Congress acts on a "cash for clunkers" program in which electronic vouchers that knock off as much as $4,500 from the price of a new car purchase would be given to those who scrap their old cars. The bill may be taken up this week. Congressional Democrats are considering fast-tracking the legislation to a must-pass war spending bill, Reuters says.
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