Deals ahead on high-MPG cars as gas prices drop
(MoneyWatch) Sales of fuel-sipping cars -- especially the Toyota Prius -- surged in April. But analysts say patient shoppers will likely find better deals on high-MPG cars in the months ahead as gas prices go lower.
Similarly to recent years, with gas not far from $4 a gallon, April car buyers loaded up on high-MPG vehicles. Sales for the family of hybrid Prius cars doubled from last April, when Toyota had supply constraints because of the Japanese earthquake and tsunami. Even though General Motors' overall sales were lower, the new Chevrolet Sonic high-MPG subcompact sold 38 percent more than the Aveo model it replaced. Sales for the compact Ford Focus rose 12.5 percent. And, analysts at Kelley Blue Book's kbb.com point out that shoppers were paying near list price for these fuel-efficient cars with very little offering of rebates or sweet lease deals.
The one notable exception is the sizable $1,000 rebate GM is offering on the Chevrolet Cruze to returning Chevrolet customers. The Cruze, with one model rated for 40 MPG in highway driving, slowed down by 27 percent from its sales pace in March. The Cruze LS model -- if you qualified for the $1,000 rebate -- would cost about $17,550, or $575 below dealer invoice price, according to Edmunds.com
More such deals could appear now that gas prices appear to have peaked following a lessening of tensions with Iran and lower probability of crude oil supply disruption. The national average price for regular was $3.80 a gallon this week, compared to $3.92 a month ago, according to the AAA fuel gauge report. "Now that gas prices have peaked, demand for fuel-efficient cars will likely taper off," says Alec Gutierrez, senior market analyst for Kelley. "Consumers can expect better deals as manufacturers battle for market share in an increasingly crowded segment."
Similar to last year
The pattern seems similar to last year, when gas prices also ran up to nearly $4 a gallon. Not only were new high-MPG cars selling at list price without incentives in 2011, but values for used models of those cars spiked. By later in the year with gas prices having settled back to $3.50, those used values dropped by 15%.p>
Kelley's Gutierrez argues that competitive new-car pricing later in the year is likely because of the wide choice of new or redesigned small, high-MPG cars. Those include not only the Chevrolet Cruze and Sonic but also the Ford Fiesta and Focus, the Prius C small version of the hybrid, the Fiat 500, Honda Civic, Hyundai Elantra and Volkswagen Jetta. Chrysler is also about to send dealers a new entry in this class with the Dodge Dart.
So if you are thinking about a new or used fuel-thrifty model, drive your thirstier old car a few more months and look for better deals.
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