Car buyers to see fewer discounts

DETROIT — For years, Americans shopping for cars were treated to all sorts of deals and incentives, especially at the end of summer. Think Cash for Clunkers, which paid up to $4,500, or promotions that offered employee discounts to everyone.
Those days are over.

Deals are getting scarcer because automakers, newly lean and profitable, are holding the line on those profit-eating promotions. In July they offered $1,000 less in incentives per car than a year earlier, according to Edmunds.com.

And with no one expecting the government to offer a repeat of the Clunkers program, get ready for fewer discounts on your next car.

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"This may be as good as it gets, and get used to it," said Jeff Schuster, the executive director of forecasting for J.D. Power and Associates.

As a result, U.S. auto sales are at a standstill, with potential buyers waiting for more deals but automakers resisting. The industry expects this to be the worst August in 18 years, with sales barely over 1 million cars and trucks. Sales are expected to fall 3 percent from July, according to car-pricing website Truecar.com.

August usually sees strong sales as automakers offer deals to clear out the lots for new models. In August 2007, before the recession, automakers sold nearly 1.5 million new cars and trucks. In August 2009, when sales were at a 30-year low, the government came to the rescue. Cash for Clunkers, which paid buyers up to $4,500 per vehicle, boosted sales by about a third to 1.2 million.

But this year, the government is on the sidelines, and so are many buyers.

Fewer vehicles produced

The standoff between buyers and carmakers could continue through the rest of the year unless companies sweeten deals or there's some sort of government intervention, says Jesse Toprak, TrueCar's vice president of industry trends and analysis.

"We really need some sort of catalyst to take us up to a higher level," Toprak said. Car sales are still far below normal levels because, with unemployment still high and home values sharply lower, consumers just don't feel confident enough to buy.

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