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Cold Winter Could Mean Hot Deals in the Spring

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On: Fri, Feb 21, 2014 at 9:05AM | By: Karen Cook

Cold Winter Could Mean Hot Deals in the Spring

The bitterly cold and snow-laden winter has taken its toll on sales in the auto industry. Whether people couldn’t get to dealerships or just didn’t want to go out in the mess, they weren’t buying cars. 16 million cars were predicted to be sold over the winter months, but the reality fell well short of this mark with January sales dropping 12% for manufacturers like General Motors. Inventory that normally moves off a GM lot in around 80 days is sitting for almost 115 days. Even though the demand has dropped, production has not, with cars coming off the assembly line as if someone wants to buy them.

What is bad news for auto makers could be good news for auto buyers. GM has already started some pretty hefty incentives to try to get the pile of inventory on dealer lots to move. Through the end of February several makes and models have cash incentives ranging from $500 to $2000; there are also deals to be had on early lease terminations if you get a new vehicle. Other major car brands are expected to follow suit.

If the industry prediction is correct—that this is just a weather issue—the spring should see a major increase in sales tactics which could mean big deals for buyers. If the drop in sales is not weather related, buyers could find even bigger deals as manufacturers make even more drastic attempts to seduce them.

Morgan Stanley, an analyst for the automotive industry, stated in Automotive News that “the industry stands at a crossroads. We really think the best of the US auto replacement cycle is over. The incremental buyer is moving from someone who needs to replace their car to one who just wants to.”

At this point it is difficult to tell what the exact cause of the unexpectedly low winter sales is, but if you are in the market for a new car you might want to hold off until the spring thaw causes a flood of deals to be available from dealers.


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