Deals on New Wheels

published 1 February 2011

After a long period of rightsizing, rebuilding and, in the case of General Motors, repaying government loans, the auto industry is back on track. "Development and strategy are taking over from the firefighting of the past 18 to 24 months," says Jeff Schuster, of J.D. Power and Associates, an automotive data provider.

But the slump will influence the industry for years to come. After dipping to 10.6 million in 2009 and 11.5 million in 2010, vehicle sales should stabilize at about 13 million a year, instead of the nearly 17 million a year that marked much of the past decade. Carmakers have curtailed production to reduce excess inventory and curb steep discounting, so incentives are down and prices are creeping back up.

To get a good deal, it's more important than ever to do your homework. Kiplinger's annual buyer's guide can help you find the best values. We sorted the 2011 models by price and category, and ranked them for performance, safety, roominess and our own driving impressions. In the tables you'll find the top 25 models in each category, as well as our picks for Best in Class and Best New models. Five additional vehicles in each category that scored high enough to be in contention for the top awards are highlighted as "Worth a Look." We also asked our partner, CarBargains, to shop for our winners at dealerships around the U.S. to see how good the deals can be. You won't see Hummer, Mercury, Pontiac and Saturn models this year; those domestic nameplates have all been retired. Saab was saved from the chopping block by a sale to Spyker, a Dutch automaker. (See data on all the 2011 models.)

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Hyundai's new Sonata exemplifies these trends perfectly. The redesigned 2011 model forgoes a six-cylinder version altogether -- unheard of in the midsize market. With its 2.4-liter, four-cylinder engine, the Sonata achieved best-in-class efficiency of 35 mpg on the highway while beating the power of its four-cylinder midsize competition. Rodney English of Chevy Chase, Md., gets 37 mpg on the highway in his leased Sonata with no trade-off in power or roominess. For $219 a month, he says, "the driving experience for the price is very good." The Sonata is also available as a hybrid and in a powerful, 2.0-liter, direct-injected, turbocharged version.

For 2011, more cars are getting safety equipment that used to be available only on luxury models. Ford, for example, is offering collision warning with brake support as an option. The system uses adaptive-cruise-control radar to monitor the distance to the car in front. When it senses you're getting too close too fast, the system precharges your brakes to give them more stopping power. Blind-spot monitoring and lane-departure warnings are available on many midprice vehicles.

One of the biggest parts of the value equation is the quality of what you buy. Dave Sargent, of J.D. Power, notes that the industry's initial quality has been steadily improving. In the company's Initial Quality Study for 2010 models, the average score for domestic models outpaced imports (although just barely) for the first time in the study's 24-year history. Ford broke into the top five, surpassing both Honda and Hyundai, which were sixth and seventh, respectively. The top four brands, in order, were Porsche, Acura, Mercedes-Benz and Lexus.

Overall, though, the average of reported problems remained nearly flat compared with the 2009 model year. Sargent attributes that to the effects of the massive Toyota recalls of early 2010, which had dealers working overtime to fix problems. Despite the publicity nightmare and Toyota's deep discounting to prop up sales, the carmaker regained ground it had lost in resale value -- but was the only nameplate to post lower sales for 2010.

You'll have to do some research to find the best price. Use TrueCar's price reports to see average transaction prices in your area. Once you know what you should be paying, make dealers compete for your business -- e-mail several to see which one has the vehicle you want for the lowest price, then get the dealers to bid for your business. If you hate to haggle, consider using Kiplinger's partner, CarBargains, the buying service of the nonprofit Consumers' Checkbook organization. For $200, CarBargains will get five dealers in your area to bid against one another for the car you specify. When CarBargains shopped for ten of our best new vehicles, it found seven below invoice.

Before you hit the lot, make sure you know what your credit score is -- you'll need a score of 740 or above to get the best rates. Five-year loan rates are averaging about 6.2% at banks and 5.1% at credit unions for those with good credit, according to Bankrate.com. Carmakers' financing arms offer low rates if you have excellent credit.But don't head for the dealership unless you have an offer from your bank or credit union in hand. That way, you'll have leverage and a backup plan.

Leasing is one option if you aren't able or willing to come up with a down payment or if your trade-in doesn't cover it. Leasing makes financial sense if you trade in frequently and always have a car payment. As consumers seek to slash monthly expenses, Tarry Shebesta, president of LeaseCompare.com, expects the number of new cars that are leased to rise to 27%, up from 25% in 2010. Nonluxury Asian automakers have recently joined luxury carmakers in promoting lease deals.

We pick Best in Class and Best New winners based on performance, value and safety. About half the score is awarded for performance and value, including resale value, power, fuel efficiency, front and rear legroom, headroom, and cargo space (the space in the trunk or the space behind the second-row seats in a wagon, crossover or minivan). Sedans are ranked within price categories. Sports cars, crossovers, SUVs, minivans and wagons aren't broken out by price, so we also score on a scale that rewards lower prices.

Keys to a great deal. Only the most desirable vehicles actually sell for the suggested retail price. That's why we also list the invoice price (all prices include the destination charge). Our invoice price does not reflect the "holdback," which is money refunded to the dealer from the carmaker after a vehicle is sold. Ideally, you'll negotiate a price as close to the invoice as possible. At least aim for Kelley Blue Book's Fair Purchase Price, which represents the most common sale price for the vehicle. Before you shop, check KBB.com for price updates.

Topics

Features Buying & Leasing A Car

Anderson has been with Kiplinger since January 2004, when she joined the staff as a reporter. Since then, she's covered the gamut of personal finance issues—from mortgages and credit to spending wisely—and she heads up Kiplinger's annual automotive rankings. She holds a BA in journalism and mass communication from the University of North Carolina at Chapel Hill. She was the 2012 president of the Washington Automotive Press Association and serves on its board of directors. In 2014, she was selected for the North American Car and Truck Of the Year jury. The awards, presented at the Detroit Auto Show, have come to be regarded as the most prestigious of their kind in the U.S. because they involve no commercial tie-ins. The jury is composed of nationally recognized journalists from across the U.S. and Canada, who are selected on the basis of audience reach, experience, expertise, product knowledge, and reputation in the automotive community.