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Worth the wait
The '04 models are arriving at auto dealers, but it's best to wait for incentives expected soon.
August 20, 2003: 2:35 PM EDT
By Chris Isidore, CNN/Money Senior Writer

NEW YORK (CNN/Money) - For automakers, 2004 has already begun. The new models have started to arrive in showrooms. But for buyers eager to get behind the wheel of a new model, it's best to ease off the gas pedal.

The incentives, such as zero-interest financing or thousands of dollars cash back, that have fueled the Big Three's sales since spring, are tough to find on the first 2004 models hitting dealers' lots. But experts in the field said that some attractive deals are likely to be found as early as October.

"Our position is there are going to be aggressive incentives on 2004 pretty much right off the bat," said David Lucas, analyst with sales tracker Autodata. "The sentiment of customers is if they come in and it doesn't have a promotion on it, they'll wait until it comes on. And the automakers know that."

For many buyers, a 2003 model might make more sense, especially if the 2004 model hasn't seen a redesign. But for some buyers, such as those looking at a relatively quick turn around on a redesigned 2004 model, the new model makes more sense. But patience will be an economic virtue for those buyers.

There are scattered attractive incentive offers out there -- the 2004 Jeep Grand Cherokee already has the same zero percent financing or $3,000 back that the 2003 model has. But many 2004 models only have about half the incentive level as the 2003 model at this point, said Mike Flynn, head of the University of Michigan's auto research office. But he said even at that level, this August is already an unusually high level of next model year incentives, a sign that even more attractive incentives are on the way.

"If they were going to try to get out of the incentive game, they'd wouldn't be offering these levels already," he said.

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The automakers won't discuss their incentive plans for 2004 models yet, but experts say the three U.S.-based automakers, GM, Ford Motor Co. and Chrysler Group, the North American unit of DaimlerChrysler, have shown no willingness to give up market share, something that a move away from incentives would likely cause.

"Simply put, if the '03 had high incentives earlier this year before the clearance started, then the '04 are likely to have it sooner rather than later," said Bob Schnorbus, chief economist for J.D. Power & Associates. "The automakers want to give the '04 a trial period to see how they move without incentives. But they won't wait long, maybe only a month."

In 2002 General Motors led the industry into a new round of 2003 incentives when it reintroduced zero-percent financing on most of its car models in October, although they held off on incentives on many light trucks, such as sport/utility vehicles, until later that year or even earlier this year for some models.

The reason that there aren't big incentives already on many of the 2004 models is that there are relatively few available and both automakers and dealers are more concerned with clearing out 2003 models than selling the few 2004 model on the lot. George Pipas, Ford's manager of sales analysis, said 2004 models will be less than 10 percent of dealer inventory on Labor Day, and only about a third at the end of the month.

"There will be some attention and buzz on '04 F-150," said Pipas, talking about the redesigned version of Ford's best selling pickup, "But they won't be talking about '04 model line for other vehicles."

Despite rising interest rates that raise the cost of financing packages, the popular zero-percent financing option is likely to be back for many 2004 models at some point, if not soon, said the experts.

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"The zero percent is real effective on those (U.S.) models," said Lucas. "Customers shop the monthly payment, so zero percent is what moves the vehicles. As long as they (automakers) can afford to offer zero percent, they're going to be there with it."  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.