Car Deals Abound With Drop In Demand

The recession has sapped demand for cars, so now may be a good time to think about buying one. Industry experts say prices for many vehicles are lower than they've been in years.

"There are just an incredible amount of deals," says Jessica Caldwell, an analyst for Edmunds.com, a Web site for car buyers. "It doesn't matter what vehicle you're looking for, or what brand you're looking for. We're seeing finance deals for Bentleys."

But all those deals have yet to send customers stampeding to the showrooms.

In March, overall vehicle sales were down 37 percent from the same period in 2008.

Consumer Anxiety

Dealers say the problem is not so much financing as consumer anxiety.

And that's pushing dealers to cut prices on all kinds of cars and trucks.

Abbas Khademi is the general manager at Ourisman Chevrolet in Marlow Heights, Md., just outside Washington, D.C. He's selling a Chevy Cobalt coupe for just under $9,000. The sticker price is around $15,000, but Khademi says there are a variety of programs, including rebates and bonus cash, that bring the price down.

"To be honest with you, we're just trying to sell some cars," says Khademi.

The Cobalt is not a hot seller, even in good times. But Khademi is even cutting prices on popular cars, like the redesigned Chevy Malibu, a sleek sedan that won the distinction of 2008 North American Car of the Year.

"Two years ago, we were not even barely discounting the car," Khademi says of the Malibu, which lists for more than $22,000. "We have those now on sale for $14,300."

There is a small catch: To get that price, you have to trade in a vehicle that isn't made by GM. Otherwise, you have to pay an extra $1,000.

Khademi says he's losing money on deals like this, but hopes to make it up in his service bays.

"We sell you the new car, you come back, you use our service department and then when you need another car — for your family, for your neighbor, for your friends, for your parents — you can recommend us," he says.

Profits From Service

Despite what you might think, dealerships don't make their big money on new car sales. Khademi says 75 percent of the profits at Ourisman come from service, parts and repair.

But to make that business strategy work, Khademi has to first sell new cars, and some of the prices aren't as low as some people expect.

Nelson White recently came into the dealership looking to spend about $25,000 on a Chevy Traverse, a crossover model. White has a second child on the way and needs a vehicle that can take two car seats comfortably.

Ourisman's price was $30,000. White was tentative about it: "It's an OK deal," he said. "It's not as sweet as I thought it would be, but it's OK."

Pacing The Floor

Ourisman is happy to have shoppers like White. The phone rarely rings in the showroom, and salesmen spend most of their time pacing the floor with their hands stuffed in their pockets.

Henry Marin, who handles finance for the dealership, says one reason more people aren't buying is because they want to see if GM will collapse — and perhaps cause prices to fall even further.

"They're waiting for the bankruptcy," he says. Marin says he tells customers that the process isn't going to be like a small business going bankrupt and "selling everything at 50 percent, 60 percent or 70 percent off."

Fortunately for the dealership, there are still customers like Carl Little Jr., a plumber who drives a five-year-old Chevy Silverado pickup.

Little was lured to the showroom by a newspaper ad that offered trucks for as low as $13,500. With extras, he thinks he can get a new Silverado for as little as $22,000.

"I think they'll work a deal with me," he says, confidently. "I think we'll be able to work something out."

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