Automakers are selling a greater percentage of older models this fall, meaning bargains for buyers. December 1, 2004: 3:52 PM EST
By Chris Isidore, CNN/Money senior writer
NEW YORK (CNN/Money) -
Automakers are having a harder time clearing their lots of the previous year's models, according to two leading auto sales trackers.
Autos
36 month new
5.91%
48 month new
5.98%
60 month new
6.03%
72 month new
3.78%
36 month used
6.31%
Data from Edmunds.com and the Power Information Network, an affiliate of J.D. Power & Associates, both show that 2004 models are making up a larger percentage of sales this fall than in the past.
The trend means better bargains available for car buyers willing to take those older model vehicles. It also means still thinner margins for automakers, especially General Motors Corp. (Research), which apparently had the most 2004 models left on the lots in October.
Edmunds data shows 2004 models made up 54 percent of new vehicle sales in October, compared to a year earlier, when 2003 models made up only 45 percent of October sales. In October 2002 only 31 percent of the new vehicles sold were 2002 models, according to Edmunds.
Power reports similar numbers -- older models making up about 53 percent of October sales this year, 44 percent in October 2003 and 33 percent in 2002. Power's statistics show that this has not been a continuous upward trend; 2001 had about 34 percent of older models making up October sales, while 2000 saw older models account for nearly 39 percent. But the recent figures represent the highest level of sales of older models since Power started tracking the data in 1998.
Tom Libby, analyst with Power, said that its data also shows that the number of days that vehicles are on dealer lots is at an all-time high, feeding the trend.
"You've got dealers hesitant to order 05's until they move the 04's; the 05's are being squeezed out," said Libby.
Power shows that the average cash back available to buyers of older models was about double that available to buyers of 2005 models in October -- $3,892 for those buying 2004's, versus only $1,943 to those buying the newer models.
Edmunds' statistics show that the bargains are better this year than they were a year ago for those buying the older models in each period. The average discount from manufacturer's suggested retail price to net price paid for the 2004 model year vehicles was $5,970 in October. That's up about 9 percent over the average discount that buyers of 2003 models got in October a year ago.
Part of the problem for automakers is that many of the new vehicle designs are being introduced earlier in the year than in the past, according to analysts from both sales trackers.
The earlier introduction of new models is "creating more competition for the previous model year vehicles, which in many cases are already in an oversupply state," observes Dr. Jane Liu, vice president of data analysis for Edmunds.
Lateness hurts, too
New model year sales are also hurt by some new vehicles being released later in the calendar year than in the past.
"Some of the models -- the Ford Five Hundred, the Ford Freestyle -- were just being launched in October," Libby said. "The Chevy Cobalt is just hitting showrooms now."
The Edmunds and Power statistics were not broken down by automaker.
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George Pipas of Ford Motor Co. (Research) said his company's mix between old and new vehicles was roughly the same in October and November as in previous years. General Motors spokewoman Deborah Silverman confirmed her company had 2004 models make up about 55 percent of October sales, but said that was only slightly higher than previous years.
"The market is a little bit softer," she said. "The difference between this year and a year ago is not all that high."
Chrysler spokesman Kevin McCormick said that the company 2004 models made up only 40 percent of its October sales, and that had dropped to 25 percent of its November sales.
"By the time December rolls around we should be next to zero," he said.