Auto industry woes put buyers in driver’s seat

If you can get credit, it's a car buyer's market, though.

Dustin and Katie Cummings, both 25, of Grinnell, Iowa, found themselves Tuesday afternoon at Karl Chevrolet in Ankeny, a pristine dealership on the north edge of Des Moines with acres of new cars, trucks and SUVS. An occasional customer drove through on this sunny but cold winter day. The Cummings were among those who got out for a closer look and who came inside to talk further.

Salesman Matt Moro said incentives are one reason he's starting to see more customers.

"I wouldn't say the floodgates opened, but we definitely saw increasing traffic," he said, adding that GM's new incentive package is a significant improvement over what Des Moines dealers had seen in recent months.

The Cummings did their homework before talking with salesman Dave Barlow. They were ready to buy.

Katie Cummings said she's had her eye on a Chevrolet Tahoe, a large four-wheel drive SUV, to replace their smaller Mercury Mariner. Katie had researched the Tahoe on the Internet and knew the features she wanted.

Dustin said his family is loyal to Chevrolet. His dad recently bought a vehicle at the same dealership, so they knew where to go, what they wanted and had an idea of price. Dustin is continuing a long family tradition of farming. Katie stays at home with their 5-month-old daughter.

They were pleasantly surprised to find GM had just announced new incentives and the Tahoe was included.

The new program is particularly good for customers who own GM vehicles already, because it offers as much as $3,000 in cash to anyone who owns a GM vehicle 1999 or newer.

The Cummings took advantage of the $1,000 cash back GM is offering in addition they'll get another $3,000 in brand loyalty cash because Dustin owns a Chevrolet Silverado pickup.

The sticker price on the white Tahoe loaded with extras was $59,625, although they were negotiating on the final price.

Sales trends in December reveal why automakers are pushing low-interest loans and steep discounts.

About 40 percent of the cars sold in December were 2008 models. That compares with December 2007, when just 19 percent of the cars sold were the previous model year, said auto consumer publisher Edmunds.com analyst Jesse Toprak.

"That means a lot of unsold old model years remain and that translates into big discounts," he said.

With that much inventory to move, incentives are likely to last at least through February and maybe March.

But it's also a message to potential buyers that the window of opportunity will likely close sometime this spring. Most manufacturers have announced plans to cut production to get inventory more in line with demand. When that happens, incentives will fall away and deals we're seeing now likely will be harder to find.

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