In early 2002, after the airline industry stopped buying thousands of cars for travelers to lease, the automobile industry was suffering a sudden drop in sales. The auto industry was forced to quickly lower prices, hand out rebates and offer zero percent financing – which created a great time to buy a new vehicle. At few months later, the used car market was suffering from a steep drop in sales because everyone was buying new vehicles rather than used vehicles. The next 6-month's was a great time to buy a used vehicle because the used car industry was forces to lower their prices by up to $2000 per vehicle to attract buyers away from the incentive of buying new.
Low Prices Today
Of course since 9/11, the auto industry has been through a lot of turmoil and has had to battle with everything from globalizations to foreign competition. Although I sympathize with the auto industry, I am writing this to help the consumer.
Right now the car lots are full and prices are low because nobody is buying. New vehicles sales are especially slow because of the drop in home equity value that is no longer allowing buyers to use the equity of their homes to buy vehicles. The used vehicle industry is also very good because of the large supply of vehicles in the market.
Reference Article: U.S. vehicle sales plunged in February
High Prices Coming
In another 6-month's, after the majority of used vehicles are sold, the supply of used vehicles will drop and used car lots will be able to raise their prices because of the short supply.
New car prices will begin to jump in price because of the increase cost of material to product them, like metal, plastic, etc – due to high inflation and the dropping value of the dollar – which will also push up the prices of all imported vehicles. Ford and GM are already cutting back production in anticipation of less people buying vehicles. Inflation will also push up interest rates, which will push monthly payments up even higher.
Now is a good time to buy. Today the car lots are full – which puts the buyer in a good position to get a good price. Next year, after some dealers go out of business and the rest of them sell the cars they have, there will not be as many choices as there are today and they will very likely cost much more.