Car-buying incentives are slowly creeping up, with discounts now at around $1,297, about 1% higher than the same time in 2022.

The pandemic changed car-buying and cut a lot of the incentives shoppers were used to.
Things are normalizing, and incentives for some types of cars and brands are creeping back.
Car-buyers could find some good deals — but markups also have to stop first.

Weary car-buyers may be in luck as some automakers bring back incentives to boost vehicle demand amid skyrocketing interest rates. 

Overall, incentives — like rebates and loyalty cash — remain substantially lower than they were before the pandemic upended the car-buying business. Car buyers didn’t see the end-of-year blowout sales in November and December that they had been used to in holiday seasons’ past. 

Instead, shoppers had to settle for new and used vehicles with markups above sticker price and no wiggle room.

Meanwhile, the average interest rate for new vehicle loans was around 5.16% in the third quarter of 2022, (up from 4.09% the year before), and 9.34% for used (up from 8.12% in 2021), according to Experian.

But in January, incentives rose slightly to 2.8% of a vehicle’s average transaction price (down from a whopping 8.6% on average just two years before and as much as 12% pre-COVID), according to Kelley Blue Book, but up from 2.7% in December.

That puts discounts now at around $1,297, about 1% higher than the same time in 2022, Deutsche Bank analysts estimated this week. It’s the “first time since July 2020 that incentives have come in higher from the prior year,” they said.

“Going forward, we expect to see incentives continue increasing as vehicle inventories rise, dependent on the production environment and ongoing supply chain challenges,” Deutsche Bank said.

Where buyers might find the best incentives

Luxury vehicles saw the highest incentives at 6.2% in January, KBB said. The most affordable vehicles, like compact cars and compact SUVs, had incentives between 3% to 4%. Vans and minivans had the lowest, at less than 1%. 

“We’re starting to see manufacturers come back with some incentivized interest rates to try to drive traffic,” Scott Kunes, COO of Kunes Auto and RV Group, which owns more than 40 dealerships in the Midwest, told Insider. “There’s also some loyalty cash, and there’s a pretty decent amount of rebates on some of the higher end vehicles. That’s a very small market, but it’s a high …read more

Source:: Business Insider


Car buyers rejoice: Discounts are making a comeback — but you might have to ask for them

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