One year ago, new car buyers were in rebate heaven. With the automotive industry in a shambles as a result of the global recession, car companies of all stripes were laying serious money on the hood of the vehicles in order to convince wary shoppers to part with their new car buying dollars. On top of generous cash back, interest rates hovered at or near zero for almost ever major brand on the market.
The past six months have seen rebates and incentives return to a semblance of normalcy as domestic automakers have emerged from the shadow of bankruptcy and import brands have also managed to put a stop to their plummeting market share. However, the recent spate of Toyota recalls has once again triggered a cascade of incentives that should make the spring months quite pleasant for those looking to save money on a new car or truck.
In March of 2009, Toyota offered approximately $1,500 per vehicle on rebates and incentives, averaged out across the brand's entire fleet. This year, that amount has jumped to $2,500. We've already explored the details of the cash back and 0.0% financing that Toyota has made available on some of its best-selling cars, like the Toyota Camry, the Toyota Prius and the Toyota Corolla in previous columns. What we haven't looked at is the effect that this brand's strategy to keep customers heading to its showrooms despite the negative press surrounding unintended acceleration is having on other car companies.
In short, Toyota has managed to lure previously reluctant automakers back into an incentives war. The primary weapon in this battle for the hearts and minds of customers? 0% financing. General Motors has introduced zero percent financing across its Chevrolet and GMC brands, and some very appealing vehicles are now available at this lowest possible interest rate for as many as 60 months. Even vehicles like the Chevrolet Malibu, Chevrolet Silverado, and the GMC Acadia can now be had at this rate. Ford is also offering zero percent financing on vehicles like the 2010 Ford Mustang, 2010 Ford F-150 and 2010 Ford Fusion, and Chrysler has piled onto the bandwagon with 0% financing on many Jeep, Chrysler and Dodge vehicles.
Although the Big Three domestic automakers had hung back from offering blanket zero percent financing over the past several months, the opportunity afforded by Toyota's stumble combined with the perceived need to match its aggressive rebates was something that could not be ignored. Ford, Chrysler and GM are of course no strangers to the deep incentives game, but surprisingly other car companies such as Honda have also decided to play along. The brand's 'The Really Big Thing' sales event has seen it offer financing rates between 0.9 and 1.9 percent across a wide number of vehicles, including the Honda Civic, Honda Accord and the Honda Fit. Nissan's 'Now' sales event is providing zero percent financing on almost every vehicle in its lineup, while Mazda's 'Claim Your Mazda' initiative also makes 0% financing available across most of the vehicles it sells.
The incentives programs are clearly working if judged by the amount of metal being moved. Toyota sales are almost 50 percent higher than they were in March of last year, although how much this has to do with rebates and how much can be attributed to a recovering economy is up for debate. While cars and trucks might be moving off of the lot, offering these low financing rates doesn't come cheaply for an automaker. On a $30,000 vehicle, it costs a manufacturer almost $5,000 to provide an interest-free loan for a five-year period. This means that new car buyers need to act fast to take advantage of these spring deals before brands decide to stop the bleeding and rescind these fantastic offers.