General Motors reported stronger U.S. sales Thursday. That may cheer investors, but analysts say the news also means car buyers searching good deals might want to wait.
GM’s profit in North America rose 23% at $1.7 billion, helped by tight control on inventories. The company expects profitability to remain steady in the second and third quarters as it focuses on a new range of light trucks, luxury Cadillacs, and the new version of its Chevrolet Malibu midsize sedan. But buyers looking for a car should hold off until automakers roll out their new stock, analysts say. The Chevy Traverse, Nissan Altima, GMC Acadia and Buick Enclave will soon be replaced by the 2013 line. “There will be some discounting on older models when those new models arrive,” says Chintan Talati, spokesman for TrueCar.com.
As sales have picked up, automakers scaled back incentives on new cars in recent months in a move to boost their profit margins, analysts say. Incentives fell nearly 5% to an average of $2,446 during April, according to a survey by TrueCar.com, and have dropped by nearly 10% for Ford. “I wouldn’t expect much in the way of incentives,” says Joe Wiesenfelder, senior analyst at Cars.com. He says U.S. carmakers needs to keep profit margins higher here partly due to weakness in Europe. “The days of incredibly amazing deals are probably behind us,” Carroll Lachnit, features editor at Edmunds.com. The one exception may be Japanese automakers, which have kept incentives up. (Tom Henderson, a spokesman for GM says incentives will rise and fall, and says transaction prices don’t take account for the high trade-in prices for used cars.)
It’s also a busy time of year for the auto industry, so there are fewer reasons for dealers to cut prices, experts say. “If you can wait for the fire to be off the market that’s a good idea,” Lachnit says. The average transaction price for light vehicles in the U.S. was $30,303 in April 2012, up 4.2% ($1,219) from April 2011, TrueCar.com says. “Typically more people buy cars as the weather gets nicer,” says Brian Moody, industry analyst at AutoTrader.com. Deals for leases may be more enticing at the moment, he says. GM, for instance, is offering $159 per month leases on a Chevy Cruze, with a $1879 down payment.