U.S. Auto Incentives in April Reach 5-Year Low

Customers taking on auto loans in April were faced with the fewest new car incentives in five years. A new report released by New Jersey-based Autodata Corp. revealed that automakers reduced spending on discounts and incentives in the U.S. by 14 percent in April to an average $2,320 per vehicle.

Automakers Offer Fewer Discounts

As noted by the data collection company on Tuesday, many automakers are trying to reduce their costs by slowing their spending on discounts and promotions. As a result, the following automakers have adjusted their incentives:

• Ford Motor Co.: Ford’s average spending on discounts and promotions dropped 20 percent from a year earlier to $2,399 per vehicle.
• Chrysler Group LLC: Chrysler reduced its spending by 23 percent to $2,806.
• General Motors Co.: GM dropped incentives by 8.1 percent to $3,068.
• Toyota Motor Corp.: Surprisingly, Toyota, which has halted production as a result of damage caused by a massive earthquake and tsunami, reduced its spending the least–only by 3.1 percent to an estimated $1,885 per unit.

Nissan dropped its incentives the most over the year-long period, reducing spending by 33 percent to $1,998. The only automaker to actually increase incentives in April was Honda with a spike in spending of 8.7 percent to $2,171.

Look for Fewer Incentives in the Near Future

Experts believe that incentives are likely to continue dropping in the coming months due to Japan-related supply shortages after plants had to close or halt production due to the devastation. Because many U.S. automakers receive their parts from Japanese suppliers, they have suffered as well.

Many new car buyers rely on interest-rate reductions and car incentives to significantly reduce the price of a car. So what are some other ways to lower new-car costs?

• Consider a small bank, credit union or peer-to-peer lending: To lower the cost of financing a car, it’s good to look into financing with a small bank, credit union or even peer-to-peer lending company because they often offer better interest rates than dealers.
• Haggle with the dealer: Even if you can’t get your hands on incentives, you can haggle with the dealer to bring the car’s cost down. You might be able to lower the price so that it feels as though you’ve received an incentive.
• Buy from a private owner: Another option to consider is purchasing a car from a private owner. Of course, in this case, you would be buying a used car, but you might be able to find a one- or two-year-old car that’s been dropped in price because the owner needs to let it go.

Also keep in mind that as a new car buyer, you want to make sure you’re purchasing a car you can afford, not just in the moment, but down the line. This means looking for a car that will lower repair costs, maintenance fees and insurance costs.