Falling Sales, Have You Been Impacted?
4/2/2008 11:38:58 AM
Posted in
Manufacturer News
[1] User Comments
Tags: sales, economy, toyota
The Wall Street Journal has an article about the overall decline in new car sales for March, 2008. Not really a surprise given the state of the economy and the dollar, but some of the suggestions it gave buyers don't line up with what all car buying advocates have been preaching for years and years. Has the economy had an effect on the old tried and true methods?
Falling Sales, Have You Been Impacted?
Toyota suffered a 10% decline in sales for March of 2008, making it the 7th month out of the last month it has failed to post growth numbers. Pretty staggering considering just how much better shape Toyota is in than most of their competition. While the Toyota drop was significant, its competitors state side all dropped even more. GM and Chrysler both dropped just under 20% and Ford managed to drop a more "respectable" 14%. What does this mean in real-world terms? Lots of new cars sitting on lots.
With so many new cars sitting on the lots, it must be a buyer's paradise and a volume dealer's dream, right? Not so fast. True there is an overcapacity situation with new cars, but buying that new car has become much harder for those who want to finance their purchase. And because 91% of car buyers use financing, this affects almost everyone. It has become increasingly hard to to get a good rate, even with a good credit score. The Journal offered up 3 tips to help the consumer, 2 of which we agree with.
The Wall Street Journal advises customers to:
- Get a copy of your credit report and fix any errors before applying for a car loan.
- Compare rates online and at your local banks and get pre-approved before heading out to the car dealership.
- Make a big down payment, which typically means better terms on your loan.
These are very true tips, with the exception of the third. Having a lot of equity in a car is rarely a good thing. You want to have as little in your car as possible in the event it is stolen or wrecked in an accident, you might not get it all back from your insurance company depending on how much the car has devalued and how much you have into the car already. We've always advocated putting as little down as possible, and sticking the rest in a fund or money market account.
So is it the financing or the economy that is keeping you from buying your next new car?