2013 Cars: More Models, Fewer Incentives

It’s no secret that the auto industry was hit hard during the economic downturn: Production fell, and plans for new vehicles were postponed. But starting with the 2013 model year, which dawns on dealer lots soon, manufacturers will be pumping out more new models than in recent years. For example, Nissan aims to launch five new cars in the next 15 months, starting with a redesigned 2013 Altima. Analysts at Bank of America Merrill Lynch say automakers will refresh 23% of their product lines each year from 2013 to 2016. In the previous ten years, replacement rates in the industry averaged just 16%.

What's behind the uptick? In the early 2000s, manufacturers -- particularly makers of domestic cars -- struggled to fund pensions and shore up corporate balance sheets. With their attention focused on the business, carmakers lost focus on the product. Convinced that the worst is now behind them, manufacturers are looking to make up for lost time, and production lines are humming.

Expect to see a plethora of new vehicles -- and better ones, too. John Murphy, senior auto analyst for Bank of America Merrill Lynch, says automakers will look to differentiate their cars from competitors. Infotainment systems will continue to expand to include in-car Wi-Fi and more connections to your phone's apps. Manufacturers will also keep upping the ante on fuel economy, either with high-tech gasoline engines or advanced electric vehicles.

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New-car buyers have been sidelined recently by the poor economy. But, says Murphy, "the product just keeps getting better, and that will pull a lot of buyers into the market."

Still, with so many choices, you may find some bargaining power at the dealership. Just don't look for the generous incentives of years past. Production and demand are more evenly matched these days. All that excess inventory and the deep discounts that came with it are just about gone.