Cars

Driving Deals

More choices and sweet incentives in the showrooms.

By Mark Solheim, Senior Editor, Kiplinger's Personal Finance

December 2003

Thinking about buying a new car? Join the crowd. Americans drove off with 16.6 million new vehicles during the 2003 model year. Despite high jobless numbers and a jittery stock market as the U.S. went to war, consumers kept showing up in showrooms.

It wasn't without coaxing, though. Carmakers poured on rebates and low-rate financing.

If you resisted in 2003, prepare for even more intense courting in 2004. Nearly 60 new or redesigned models will roll onto the scene, many of them ever-more-posh SUVs and pickups, spiffy sports cars, and technology-laden luxury cars. The plethora of new models is part of a strategy to tailor more cars to niches of buyers who, automakers hope, will pony up full sticker price. Some 2004 models with a lot of buzz, such as the Mazda RX-8, Cadillac SRX, Honda Civic Hybrid and Toyota Sienna, have indeed been driven off dealers' lots without discounts.

But that doesn't mean the days of the deal are over. Far from it. The drive to prop up production and compete for market share means manufacturers will continue pushing rebates and low-rate financing, predicts Bob Schnorbus, chief economist for J.D. Power. In fact, the price war escalated this fall, with generous incentives on a number of spanking new 2004 models. Factor in rebates -- recently $2,850, on average -- and car buyers in September forked over an average of $25,300 per car, slightly less than a year earlier, according to Power Information Network, a division of J.D. Power.

With offers too good to refuse, an improving economy and continuing low interest rates -- not to mention an increasing number of three- and four-car families -- Americans will keep trading in and trading up. But don't go to the dealer without doing the research that can land you an even sweeter deal. Many vehicles with generous rebates, particularly trucks and SUVs, still have plenty of profit left for manufacturers. And because rebates come directly from the carmakers, dealers' margins aren't being squeezed. Press hard for your best pre-rebate price.

Kiplinger's 53rd annual buyer's guide in the Decmeber issue of Kiplinger's Personal Finance gives you the tools you need to pick the best vehicle for your needs and get the best price for your budget. Vehicles are ranked by a combination of factors -- performance, safety, roominess and value -- to produce a Best in Class and Best New Car in each category. We also identify the leaders in resale value, safety and fuel economy, and calculate the target price -- a price that gives both you and the dealer a fair deal.

This year Kiplinger's has joined forces with CarBargains from Consumers' Checkbook to offer a car-buying and -leasing service: If you'd rather not haggle, CarBargains will do the legwork for you, soliciting bids from at least five dealers and likely saving you money (see the box to the right). If you are game to dicker, pay special attention to the section of this article on how to negotiate a great deal.

Also, be sure to check out Kiplinger's Car Finder tool for the latest pricing information for the make, model, year and options you choose. You can also search for vehicles within a particular price range or monthly payment.

Sensible sports cars

To win customers without deep discounting, carmakers could take some cues from Mazda and its rollout of the RX-8. Mazda mixed new technology (a vastly improved, more fuel-efficient rotary engine) and a sleek design that incorporates four doors and a real back seat with a value price ($25,700 for the base model). When the company had to backpedal on its horsepower specs (238 hp for the manual transmission, instead of the initially published 247 hp), it offered either to buy the car back or to give customers free maintenance for four years or 50,000 miles plus a debit card good for $500 worth of purchases. (Mazda estimates about 10% of the buyers asked for their money back.)

The whole package impressed Brian and Brenda Radosavich of Stewartsville, N.J. Brian, 28, was in the market for a sporty car to make his 32-mile commute to Johnson & Johnson less tedious. But 18-month-old son, Riley, ruled out a two-seater. To "be realistic," Brian looked at the Infiniti G35 but balked at the $33,000 price tag for the two-door coupe. Then he stopped by the Mazda dealer, saw an RX-8 with six-speed transmission, heated leather seats, moonroof and dynamic stability control. He was smitten. He and Brenda, also 28, drove it home the next day for $31,700 (with plenty of buyers in line, there was no room to dicker). The clincher: Riley's car seat is easier to install in the RX-8's back seat than in Brenda's four-door Acura TL.

Although the RX-8 gets Best New Car honors, the venerable Corvette wins Best in Class based on raw power, a reasonable price and more cargo room than most of the competition. But there are plenty of new sports cars on the block. The $34,495 Crossfire, DaimlerChrysler's first successful integration of its German and American divisions, incorporates Mercedes technology in an all-American athletic design. Cadillac continues its chiseled-good-looks makeover with the $76,200 XLR. The XLR shares its platform with the Corvette and features a retractable hardtop, for about $14,000 less than the Mercedes-Benz SL500 roadster. The Nissan 350Z, Kiplinger's Best New Sports Car last year, goes topless this year as an affordable $34,390 convertible.

Rounding out the expanded sports-car category are some relatively budget-priced speedsters. The $31,545 Subaru Impreza WRX STi somehow extracts 300 hp from a four-cylinder, turbocharged engine that takes the car from zero to 60 in 4.8 seconds. The Mitsubishi Lancer Evolution (about $29,500), delivering a more modest 271 hp, drags it out to five seconds.

Keep on truckin'

Despite gasoline prices that made many a Dodge Durango owner long for a Neon, sales of pickups and SUVs kept rolling along last year. Light trucks -- a category that includes SUVs, minivans and pickups -- account for 53% of U.S. sales.

For buyers, the lure of bigger, more powerful and more luxurious vehicles clearly outweighs the prospect of high fuel costs. How else to explain customers' love affair with citified SUVs offered by upscale automakers? Buyers aren't flinching at the $56,000-plus price tag on the enormously popular Porsche Cayenne or the $41,000-plus Volkswagen asks for its V8 Touareg.

Many luxury-car owners are trading up -- and not always to the import brands. When turning in his leased BMW 328i convertible, Michael Neu, a 49-year-old partner in a Chicago ad agency, considered switching to a Lexus SC 430 or Audi TT. Then he caught wind of the new Cadillac SRX. "My wife and I went to the dealer and drove it, and I said, 'It drives like my BMW, only it's faster.'" Besides its good looks and power -- and ample room for the couple's two collies -- Neu liked the SRX's high-tech gizmos, such as the OnStar telecommunications system. One problem: Back in September, Cadillac hadn't started delivering the SRX to buyers. That didn't deter Neu. He talked the dealer into selling him the test-drive model, and he didn't flinch at the $53,000 price. "If I'm in a Cadillac," says Neu, "the carmaker has changed. This car couldn't be hipper."

The SRX and the new Nissan Pathfinder Armada tie for Best in Class and Best New Large SUV. The SRX is a more refined SUV, but the Armada ($33,950) delivers more torque for pulling power. The Armada features more cargo space and seating for eight (the SRX seats seven) and shares a platform with the Titan ($26,650), Nissan's new full-size pickup. For even more utilitarian needs, the GMC Envoy XUV is worth a look. It offers a power-sliding rear roof section in addition to a sliding midgate, so you can convert the cargo area to an open truck bed.

The Acura MDX wins Best in Class for midsize SUVs. For 2004, the MDX ($36,945) gets an extra dose of horsepower and standard side-curtain airbags, boosting its ranking above its popular sister, the Honda Pilot. Lexus redesigned the RX 330, qualifying it for Best New Midsize SUV. The RX 330 ($39,195) has more power and better acceleration from a bigger V6 engine -- and gets better highway mileage -- than last year's version. Among small SUVs, the spacious Ford Escape XLS ($22,515) gets the nod for Best in Class, based on its class-leading horsepower-to-weight ratio, ample cargo space and carlike handling.

Many of the midsize and small SUVs are "crossovers," built on car (rather than truck) platforms to appeal to urbanites who admit that they rarely go off-road. But the lines between wagon and SUV -- and even minivan -- are blurring. We think the Chrysler Pacifica, Infiniti FX 35 and FX 45, and the Nissan Murano are more wagon than SUV, so we ranked them in that category. Although the Volvo XC70 ($35,145) gets solid marks across the board and wins top honors among wagons, the Nissan Murano ($28,739) earns Best New Wagon honors. Built on the Altima and Maxima platform and equipped with a 3.5-liter V6, it has lots of pep, good handling, generous cargo space and a long list of safety features.

The minivan, trying to shed its image as a boxy, unstylish kidmobile for suburban soccer moms, gets a shot in the arm for 2004 as well. Chasing category leader Honda Odyssey, Nissan redesigned the Quest, and Toyota reworked the Sienna. The Ford Windstar -- now rebadged the Ford Freestar and its sister the Mercury Monterey -- also got a makeover.

Robert and Kristie Norman of Encino, Cal., went minivan shopping after they wearied of cramming their twin toddlers, Tyler and Shawn, into Kristie's 1995 Toyota Camry. Already a fan of Toyota products (Robert, 48, drives a Lexus GS 300), they waited to buy until the redesigned Siennas were ready to roll. The Normans considered the Odyssey and Dodge Caravan, but the top-of-the-line Sienna XLE had all the features they wanted -- a DVD player with wireless headphones, navigation system and leather seats. Plus, "with some other minivans it took a lot of effort to get the lift gate up and down, but with the Sienna you just push a button," says Kristie, 41. "When you have groceries, you can open all three doors with your thumb."

The bigger, more powerful and more stylish Sienna wins Best in Class and Best New Minivan plaudits. It has fold-flat third-row seats with a 60/40 split. The base CE model starts at a lower price than the Odyssey or Quest, and only Sienna comes in a seven- or eight-passenger configuration and has optional all-wheel drive.

In the world of pickups, Nissan's new Titan wins Best New Truck plaudits. It's the company's first full-size pickup. Recognizing that traditional U.S. truck buyers are intensely loyal to their Fords, Chevys, GMCs and Dodges, Nissan is targeting what it calls "modern truck guys," who tend to use their trucks on the weekend rather than for work. The Titan features plenty of torque for towing and a back door that opens until it hits the rear fender. The GMC Sierra Extended Cab 1500 ($25,717), with a longer wheelbase and a slightly lower price, edges out the Titan for Best in Class for large pickups. Ford's best-selling F-150 ($22,010) is all new and now has more towing capacity than any other half-ton truck, plus a snazzy new interior.

Going green

Last March, as the U.S. was preparing for war, gasoline prices topped $2 a gallon in some parts of the country. That pushed Dianne Wendt, a 41-year-old San Diego public defender, over the edge. She decided to trade in her Honda CR-V for a Honda Civic Hybrid, the fuel-stingy car whose electric motor supplements the gas engine. Now that gas prices have drifted down, she hasn't lost any enthusiasm for her $20,000 hybrid, which gets 51 miles per gallon. "I like the fact that it is good for the environment," she says.

The Civic Hybrid hasn't had much company -- only the funky, two-seater Honda Insight and the Toyota Prius. And the environmentally friendly crowd doesn't get much bigger for 2004. The Prius gets bigger and more powerful and, with no sticker-price inflation (still $20,510), wins our Best New Car award in the $17,000-to-$23,000 category. Before its delivery in October, the new Prius had a long waiting list of buyers. You'll have to wait another model year for Ford's hybrid Escape small SUV and Lexus's hybrid version of the RX 330. GM is planning a Saturn Vue SUV hybrid for 2005.

Unsedate sedans

Carmakers use racy sports cars, over-the-top SUVs and even green cars to bolster their brands' cool factor. But luxury sedans pull buyers into the showroom, too. For example, Volkswagen is bucking for an image upgrade with its $60,000-plus Phaeton sedan. And Jaguar's redesigned, $75,000 XJR brings in a lot of buyers who end up driving home an X-type, at less than half the price.

Audi's redesigned luxury flagship, the A8 L, punches up the brand's buzz in an elegant, understated way. Its interior is plush, and its high-tech, multimedia interface is downright intuitive compared with the competition. Plus it has a cavernous back seat and 330 hp in a deceptively compact-looking package. "I like the architecture of the new design, and I love the technology," says Jerry Cooper, 50, who traded in his 1997 A8 for the 2004 version. Cooper ordered it from the factory with every available option, and chose a 30-month lease. With nothing down, the monthly payments on the $69,190 car come to a steep $1,200. No sweat, says the Dallas investor. He views the low interest rate underlying the lease as "inexpensive money."

The Lexus LS 430 takes the over-$40,000 Best in Class prize for the fourth year in a row. With plenty of room, power and safety features, the $55,750 sedan barely edges out the Jaguar XJR (the category's Best New Car) on raw points, but retails for an unpretentious $19,000 less. For 2004, the LS 430 gets new standard features, including a six-speed automatic transmission, adaptive headlights that swivel as the car turns, knee airbags for the front seat and a moonroof.

In the $30,000-to-$40,000 range, the Mercury Marauder -- a sexier version of the Grand Marquis -- outshines stiff competition from the imports. With muscle-car roots from the sixties, the Marauder ($34,495) packs a 4.6-liter V8 with 302 hp, but features a refined ride and handling and a full complement of safety equipment. Mercury offered a $3,000 rebate this fall. The popular Infiniti G35, last year's Best in Class, retains its crown for 2004. Sporting a 260 hp, 3.5-liter V6 in the sedan (280 hp in the coupe), the G35 has tight handling, good cargo space and superb resale value.

Toyota's best-selling Camry wins Best in Class in the $17,000-to-$23,000 category. It's not a hot car, but it combines reliability, roominess and a price that undercuts a comparably equipped Honda Accord by nearly $1,000. In the $17,000-and-under category, the Hyundai Elantra takes Best in Class honors. The quality of this Korean carmaker's products has been steadily rising, backed by a five-year, 60,000-mile comprehensive and ten-year, 100,000-mile powertrain warranty.

--Reporters: Joan Goldwasser, Elizabeth Kountze and Katy Marquardt

For a complete list of Kiplinger's winners and information on our exclusive ranking system, see The Best New Cars. You can also compare information on 428 vehicles in the December issue of Kiplinger's Personal Finance.

• Print
• Comments
• Email
• RSS