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Big dealer stocks mean better deals when you're buying a car or truck

09/04/2012 11:10 EDT | Updated 11/04/2012 05:12 EST
DETROIT - The new car deals are still out there.

As U.S. auto sales continue to recover from the Great Recession, automakers aren't discounting like they used to, and that's made deals hard to come by. Plus, the Detroit Three got rid of excess factories during the downturn and in most cases they don't make more cars than they can sell any more. That used to drive big price cuts.

Yet there are still some simple ways to get a great car at a relatively low price, with a little work. It's all supply and demand.

First, figure out what size and type of car you want and check what all the automakers offer. There are tons of websites that have this information, including kbb.com, Edmunds.com and TrueCar.com.

Then, find the cars in that segment that aren't selling. The trade publication Automotive News and some websites, such as cars.com, list inventory levels and count the days' supply of each car — the number of days it would take at the current sales rate to sell everything on dealer lots. The latest numbers come out a week or so after automakers announce sales figures at the start of each month.

Look for cars that you like with high days' supply. About 60 days is optimal to have the right selection of models, but many cars are way above that. Those are the ones that likely will have big discounts, either from the automaker or the dealership or both.

Dealers borrow money to finance their inventories, so they are anxious to move them to unload the interest payments. Especially those that have been sitting for a long time.

"As a vehicle sits there for 30, 60, 90, 100 days plus, every additional day that vehicle sits on their lot, they have to pay for it," says Alec Gutierrez, a senior market analyst at Kelley Blue Book.

Auto companies also don't want vehicles piling up, and will offer low-interest financing, rebates and other goodies to help control inventory.

The average discount in the United States today is around 5 per cent, excluding incentives, Gutierrez says. Generally, the smaller the car, the lower the discount. Sticker prices are lower and there's not as much markup on them.

But you can beat that by looking around. And sometimes there are really great cars that sell for less than what competitors are charging. Here's some examples for 2012 models, based on inventory figures from Aug. 1:

MAZDA 3: The compact car has won rave reviews for its handling, styling, equipment and gas mileage, and its engines and transmissions have proved reliable. It's been among Consumer Reports' top-rated small cars for years. But since Honda and Toyota have recovered from inventory problems caused by last year's earthquake in Japan, the Mazda 3 hasn't been selling very well. Automotive News says dealers have 36,500 in stock for a 97-day supply. Because of that, there's an average 8.6 per cent discount at dealers, about $1,500 on the 3i sedans, which start around $17,640 including shipping, according to Kelley Blue Book. There's also zero per cent financing and good lease deals. Kelley Blue Book says you should be able to get a base model for $16,123. "It's a fantastic car. Great fuel economy, handles well," says Gutierrez.

FIAT 500: The stylish Italian subcompact also isn't selling well, even though it looks cool and is fun to drive. Dealers have 14,300 on hand for a 93-day supply of the hatchbacks. Kelley Blue Book says there's an average 5.2 per cent discount on the 500 of about $849. There's also a $500 cash incentive, no-interest financing and nice lease prices, too. KBB says a 2-door hatch starts around $16,200, but you should be able to get one for as low as $14,851. "It's a fun little car," says Gutierrez. "Almost handles like a little go-cart."

ACURA RL: The flagship big sedan from Honda's luxury brand isn't selling that well, either. Automotive News says dealers have a 120-day supply on hand. Gutierrez says it's always been a phenomenal car with decent gas mileage for its size, but it's pricey compared to the competition, namely the BMW 5 series. With discounts, you could get a nice, reliable luxury car for less. The RL starts at just over $49,000, but there's a 7.6 per cent average discount of $3,751. Acura is offering 1.9 per cent financing. Kelley Blue Book says you should be able to get one for $45,344.

LINCOLN MKZ: Based on the underpinnings of Ford's acclaimed Fusion, Lincoln's midsize luxury car isn't selling well, yet it comes with a lot of goodies for the price. Compared with the competition (BMW 3-Series, Mercedes-Benz C-Class, Audi A4) it's cheaper after the discounts. Its design also is getting old and it doesn't have the luxury panache of the other brands, but it's a good car, says Gutierrez. Lincoln dealers have 11,300 in stock for an 89-day supply. A four-door sedan starts around $35,630, but Kelley Blue Book says dealer discounts average around $2,200, or 6.2 per cent. Then there's zero-per cent financing or cash of up to $4,500. With the cash, the price drops to around $28,900. "It's certainly a pretty good bargain and tends to fly below the radar of most consumers," Gutierrez says.

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