Automakers move to clear out 2006 inventories

by Center for Personal Finance editors

NEW YORK (8/30/06)--If you're in the market for a vehicle, look for automakers to offer cash back or discount financing to clear out remaining 2006 inventories (The Wall Street Journal (Aug. 24).

This week Ford Motor Co. announced plans for 0% financing for up to six years on 2006 cars and trucks. Currently the program runs through Sept. 5.

Ford's offer follows a 34% drop in sales in July from sales one year earlier--a drop to No. 2 (behind Toyota) in sales volume--and precedes arrival of its 2007 fleet of vehicles. Meanwhile, USA Today reports that Ford Motor is considering taking the company private to give the company time to restructure and refocus.

Incentive financing normally picks up as automakers introduce new model years. General Motors, for example, is offering a variety of incentives, including 0% financing on many models with terms up to five years. Daimler-Chrysler is offering employee-plus pricing that includes 0% financing or cash rebates for certain models.

In addition to its current incentive program, Ford announced plans to roll back sticker prices on 2007 models.

Before shopping for a new vehicle, do some comparison shopping. Talk to your credit union about its auto loan promotions. In many cases, you may be better off taking a low-interest-rate loan from the credit union and a cash rebate from the dealer.