If car sales are as bad as reported, this is probably as good a time as any. Research well the vehicle you want to buy. Invoice = what the dealer pays for the car. Most do get a kick back from the factory, but it's not that much. Just watch yourself. Car dealers are pretty loose with the math when they're talking MSRP and factory invoice. If you're trading something in, you'll probably never be able to figure out what you paid. The object of the game for the dealer is always to get you to pay as much as possible while making you feel good about the deal. When a car salesman says he's selling me something at cost, invoice, or less, I start smelling something rotten. jmo

It's probably a good time to buy. Wait until next February and you'll get the same car that is 2 months older and has two more months of depreciation. The dealers are desperate right now and I predict they will be even more desperate by the 15th of this month.

Also, there should be some good used car buys as well. Old leases that are expiring will be coming in and those are the last thing a dealer wnats to see on his lot right now. They'e worried they won't be able to move those 3 yr old leasers.

On the other hand, new car sales have dropped enough so that it may impact the used car supply in a few months. As vehicles get used up, they will get replaced and good used cars may begin to sell again.

Once new cars begin to sell again, it will have give a snowball boost to the economy. Pent up demand will support higher prices.

The other scenario is that the economic fall isn't done yet and the country will go to the dogs. In that case, having a good new car could be a good thing if you can afford one. You can ride it out for several years before having to consider another purchase.

I'm expecting one of the three North American suto companies to fail: Ford, GM or Chrysler. At the moment, the Chrysler brand is the weakest one from a sales viewpoint.

Conventional logic.. When business slows, reduce the price to force business to increase.

Tires are going to be used here as an example.

Reality. By lowering the price, now the dealer would now have to sell two cars (as an example) instead of one to make ends meet. If they had trouble selling one, they are going to have double that much trouble selling two. In fact, there is no guarantee the second sale will occur, so that means the dealer directly looses by selling.

The correct solution is in fact to INCREASE pricing so that what ever business is transpiring the profits from it meet the business needs. This goes hand in hand with what I have talked about many times when it comes to some of competition in the service and repair of today's cars. Anyone can go somewhere else and get tires cheaper than I can sell them, in fact cheaper than most independent shops can sell them. The problem is, the place that sells the tires cheap is good for that, and ONLY THAT. For the customer to have anything more difficult taken care of, another shop has to be surviving and have better techs that are trained and equipped on less business than they could otherwise have. That effectively INCREASES their cost of doing business which means they have higher prices to offset the loss of the tire sales. This is what we call The Wal-Mart Effect. If you take a "fixed" amount of business, and sub-divide it in any way, that results greater expense to support it. (More people, buildings, etc) Then the ultimate cost to the public HAS to increase for those services. In short, the ten dollars per tire saved today, works out to costing you hundreds more for something else.

Now whether or not its a good time to buy or not come down to an individuals short, and long term prospects. How secure are your finances? How secure is your job? Could mounting job losses affect your business? What if you buy that Honda, the dealership fails, and now the next dealer is 50-70 miles away if you need something done to the car?

Our town is in danger of losing its last two dealerships. People just don't realize what that means. While I am right there with tooling, training, and factory equipment. I cannot honor the warranties from the manufacturer, plus parts availability could become an issue. ANY business that starts resorting to cutting prices in order to stay busy had better have huge piles of cash somewhere, or else they are going to fail. If a dealer is slashing prices, they are probably on the verge of failure, or will quickly find themselves there.

I could carry this example further. Imagine you face losing your job. In order to prevent that you convince your boss to let another worker go, cut your pay in half and you work both jobs, logging sixteen hours a day instead of eight. If this dosen't help the situation could you cut your pay more, and work more hours? Is there a limit where this strategy fails?

Thanks, all for your sage wisdom and advice. It looks like I will buy one in the next week.

I'm considering a car too and want to support an american brand. The thing is I'm not buying until I know that a certain company will survive. What good is a warranty if the company no longer exists? And, what do you think that car will be worth in a few yrs. if the company is out of business?

I don't think you need to worry about any of the big three going out of business...well Chrysler maybe but I doubt it. IMO the worst that will happen would be a chapter 11 reorganization. Chrysler will probably be purchased by another company sooner or later, but will still exist. I just purchased a 2008 GM HHR and have no fear. Of coarse I'm not the type to take a car in for warranty work for nit picky stuff like squeaks and rattles either. Don't have the time. The car would have to spit a rod through the side of the block for me to take it in for warranty work.

Be extremely careful. We are entering a deflationairy phase of the economic crisis. If that appears good as a consumer you're right! BUT! everything else shrinks as a result including wages and assests, meaning several things. No credit, high job loss, and massive bankrupcy. However, if you're one of those people who can buy with cash! I understand you can get a deal like nothing before on leftovers. How good will be determined by the dealer. But expect a 3rd reduction if with cash.
Godd luck

Car prices will drop just like Home values.They got way out of control and something had to happen.You will be surprised just how much it will adjust.It has to happen and is way passed due.