Good car deals scale back as industry rebounds
There are still plenty of good deals, and will be for the foreseeable future, but some of the best might be behind us.
Automakers dumped their sales toolboxes in March and April to do their best to move metal amid the coronavirus pandemic, but as the industry starts to rebound (perhaps more quickly than anticipated), the good car deals with big "wow" factors are getting fewer.
Automotive News reported on incentives heading into mid-May and the deals are a little more normal than some shoppers might expect as states in the US start to slowly lift stay-at-home orders. Sales data shows showroom traffic starting to normalize further, which has automakers scrapping insane deals like 0% interest financing for 84 months.
For example, Ram Trucks was ready to send anyone home with 0% interest deals for 84 months in April, but today, its best deal is for 72 months interest-free. Last month, 41% of Ram buyers went home with a 0% interest loan on their new truck, according to Edmunds data. That won't be the case in May.
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The 0% loans are reflected in the average APR for April 2020. This year, it fell to 4.3%, down from 6.3% in April 2019. All the while, it looks like car buyers took the opportunity to purchase more expensive vehicles with the incentives; the amount financed for the average vehicle in April 2020 was $37,681, up from $31,914 last year.
Another example comes in the form of payment deferrals. Hyundai, which came out of the gate strong with its Job Loss Assurance Program, cut payment deferrals from 120 days to 90 days. Truly, we likely saw some of the best financing deals in well over a decade this past month.
This could change, though. Forecasts show the industry gradually improving throughout the year, but if something comes and moves the target again, automakers could reup the generous incentives to once again pull traffic into dealerships.
