The 2009 Cars: Deals Are Insane

Auto sales in 2008 were the worst in 16 years, and this year could be even grimmer. Dealers desperate to move inventory off clogged lots are entertaining the lowest of low-ball offers. Add in generous cash rebates and low-interest financing -- at least, for the most creditworthy customers -- and screaming bargains abound.

Incentives recently averaged $2,900 per vehicle, or 18% higher than a year ago,according to Edmunds.com. No surprise that carmakers were most generous with gas guzzlers: Incentives for luxury cars averaged $6,600 per vehicle; trucks were also a steal, with $5,400 givebacks. Even the most coveted cars are selling at fire-sale prices. When we asked CarBargains, the buying service of the nonprofit Consumers' Checkbook organization, to shop for our 11 Best New Cars, they found nine of them for less than invoice (the dealer cost).

If you're in the market for new wheels, our annual buyer's guide gives you the tools to choose a vehicle and negotiate a fair price. We start by sorting the hundreds of 2009 models by price and category; then we rank them for performance, value, safety, roominess and our driving impressions.

Blood in the Showrooms

Detroit is bearing the brunt of the slump, but things are tough all over. Toyota, the most bulletproof of carmakers, announced its first operating loss in 70 years. Sales of German and Asian luxury cars, which are linked to a strong stock market, have sunk along with the Dow.

But to paraphrase Baron Rothschild, the time to buy a new car is when there's blood in the showrooms. The average transaction price dropped throughout 2008, reports Power Information Network, ending the year at $26,690, or $810 less than a year ago. With the federal funds rate hovering near zero, money for auto loans is cheap. Banks are still charging more than 6%, but credit unions offer better deals. Plus, foreign carmakers have lots of money to lend, and zero-percent-interest offers are plentiful.

One argument for buying soon is that the best deals may go away later in the year. Carmakers are reducing production and dealers are slowly but surely reducing inventories, so by midyear there should be less of a glut.

It's All About MPG

When gas hit $4 a gallon last summer, Americans finally seemed to grasp the problem of unbridled use of fossil fuels. Those high prices changed the sales dynamic, and cars overtook trucks (which include not only pickups but also truck-based SUVs, crossovers and minivans).

While car sales skidded 11% in 2008, truck sales crashed by 25%. Compared with the bloodbath in large vehicles, subcompact- and compact-car sales stayed relatively strong: Subcompacts gained 21%, and compacts dropped just 4%. Plus, more buyers chose thrifty four-cylinder engines over six-cylinders.

Incentives and cut-rate financing are running more or less inverse to the fuel-efficiency of a vehicle. Last November, Kelley and Paul Newman of Indianapolis discovered that the dealer wouldn't budge on the sticker price of one of the hottest vehicles of the year, the Honda Fit.

The Fit, which gets 33 miles per gallon on the highway, is a utilitarian yet sporty subcompact (it wins Best New Car in our Under $20,000 category). The Newmans paid the manufacturer's suggested retail price, $17,780, for the Sport model, minus $1,000 for the trade-in of Paul's ten-year-old Honda Accord, which had 220,000 miles on it and needed a few repairs. "We're a Honda family," says Kelley, "and fuel-efficiency was high on our list."

But Bill Cormicle of Flint, Mich., got a sweet deal on his new Saturn Vue, a model that was piling up on dealer lots. Cormicle was replacing a GMC Sonoma pickup and needed enough space to carry five people plus haul stuff in the back. He had been eyeing the new Vue hybrid, but when GM delayed production of that model, he chose the 2008 four-cylinder Vue (sticker price, $22,380; highway mileage, 26 mpg).

Because Cormicle's dad worked for GM, he qualified for the employee discount, which knocked 10% off the sticker price. "But dealers were giving that discount to everyone," says Cormicle. "So my dealer took another $500 off the price." The final cost: $20,028.

Now that the recession has diminished global demand and pushed fuel prices down, midsize-SUV, minivan and pickup-truck sales are perking up. But a lot of marketing and incentive dollars were spent on the launches of the new Ford F-150 and Dodge Ram pickups. At the same time, says Tom Libby, of Power Information Network, there's continued strength in sales of fuel-efficient subcom-pact and compact cars. "There is a slight case of schizophrenia here," says Libby.

Gas prices will rise again as soon as the economy regains its footing and demand turns up. Kiplinger's predicts that oil will reach $110 a barrel again in 2010 -- up from a recent $40 a barrel. And carmakers are committed by last year's energy legislation to improve average fuel economy of both trucks and cars to 35 mpg by 2020. The standard now is 27.5 mpg for cars and 23.1 mpg for trucks. So smaller cars, hybrids and electric vehicles will account for a larger percentage of sales.

New models emphasize fuel-efficiency. They're also safer: Many vehicles offer standard side and curtain airbags and stability control (stability control must be standard on every vehicle by 2012). In fact, so many models now qualify for the Insurance Institute for Highway Safety's top safety rankings for front, side and rear crashes that we added a column to our tables to recognize those vehicles.

Every new model year brings improvements in quality and dependability. As one indicator, vehicle recalls dropped 30% in 2008 compared with 2007. The new models also have more tech gadgets once reserved for luxury vehicles. Some 80% of new models offer Bluetooth wireless phone connections and advanced voice recognition, and more than half offer iPod and other portable-media-player interfaces, according to iSuppli, a technology-research company. One of the best integrated systems to date is Sync, a FordPMicrosoft collaboration that downloads your MP3-player songs and your mobile phone book, and even reads your text messages aloud.

Buy American?

As the Big Three's CEOs choked down humble pie asking for handouts from Washington, Congress, media pundits and a lot of former customers heaped scorn upon the Detroit automakers for years of erratic quality, smoke-and-mirrors marketing and over-the-top benefits for workers.

That criticism reflected frustration that's been building for 30 years -- ever since U.S. automakers lost their footing during the energy crises of the 1970s. But Detroit has been stepping up the quality of its models, and some -- notably the 2009 Dodge Challenger and the 2010 Chevrolet Camaro -- are even generating excitement. According to the latest J.D. Power and Associates dependability survey of owners of three-year-old models, Mercury scored second and Cadillac scored third out of 38 brands (Lexus was first, Toyota was fourth and Acura was fifth). Detroit has also introduced more fuel-efficient cars.

Still, the possibility that some U.S. brands may not survive gives many buyers pause. The market share for Detroit automakers has fallen to 48%, from 52% a year earlier and 60% five years ago. The consensus is that GM will survive, perhaps minus its Hummer, Saab and Saturn brands. Chrysler is deeply troubled and will either merge with another carmaker or simply go away (although its crown jewel, Jeep, will likely be bought by a competitor). At least for now, Ford is the healthiest of the three. The company turned down government rescue funds because it borrowed big a couple of years ago and still has enough cash to keep operating.

Any way you slice it, 2009 will bring more downsizing, and that includes suppliers and dealers as well as automakers. The National Automobile Dealers Association predicts that as many as 900 dealers will close in 2009, on top of the 700 or so that called it quits in 2008.

Although the uncertainty surrounding Chrysler is reason to hesitate before buying a Chrysler or Dodge, don't worry about Ford and GM models (with the possible exception of Hummer, Saab and Saturn). The Obama administration is committed to keeping Detroit alive, and if the parent companies survive, warranties will be honored and replacement parts will be produced (albeit with a likely lull in production as suppliers work through their own troubles).

The main problem with buying a phased-out nameplate is sagging resale value. But that isn't an issue if you plan to keep your vehicle until it dies. And if the dealer who sold you the car goes under, you might have to drive a little farther for service.

Best of the New Sedans

In the Under $20,000 category, the redesigned Honda Fit wins Best New Car, boosted by its fuel-efficiency (33 mpg on the highway) and an amazing 21 cubic feet of cargo area.

Best in Class honors go to the Volkswagen Jetta for safety, roominess and European driving dynamics at a value price (plus, all VWs are sold with free maintenance for the three-year warranty period). Both the Jetta and Fit Sport earn the top safety rating from the Insurance Institute for Highway Safety -- a rare honor at this price point. Other standouts in this category include the zippy Mazda3, the boxy Scion xB and the redesigned Toyota Corolla.

You have to move up to the $20,000-to-$25,000 category to find a hybrid. We gave the Best in Class nod to the Honda Civic Hybrid, which gets slightly lower fuel economy than the Toyota Prius but is a top safety pick because it comes with standard stability control (it's a $575 option on the Prius).

The larger, more powerful Mazda6 is Best New Car. The four-cylinder Mazda6 i Sport has a respectable 170 horsepower and gets 30 mpg on the highway. Choices in this category range from the tiny, hot-selling Mini Cooper to the large Ford Taurus (slated for a stunning redesign for 2010) to the affordable diesel-powered Jetta TDI (41 mpg highway), which has cleaned-up emissions and can now be sold in all 50 states.

Midsize hybrids and family sedans with more extras populate the $25,000-to-$30,000 category. For the second year in a row, Best in Class plaudits go to the Honda Accord EX V6 for its mix of roominess, power, superb handling and good fuel economy.

The Dodge Challenger R/T gets our Best New Car award. With design cues from the classic 1970 pony car, 372 hp of Hemi muscle, and plenty of legroom and cargo space for family affairs, the new Challenger generated an excitement that few 2009 introductions could claim. One entry-level luxury car, the redesigned Acura TSX, comes in under the $30,000 threshold.

The real action for 2009 is in the $30,000-to-$45,000 category. The stunning Cadillac CTS earns Best in Class, and the much-hyped Hyundai Genesis, the Korean carmaker's first luxury entry in the U.S., wins Best New Car. When a flawlessly finished rear-driver with scads of standard equipment starts at just $32,000, who cares about status? Also new or redesigned in this category: the Acura TL, Audi A4, Lincoln MKS and Nissan Maxima.

Fuel economy isn't a perk in luxury cars that cost more than $45,000. Here, it's all about craftsmanship, power and status. The Jaguar XF, which replaces the Jag S-Type, gets our Best New designation. "It's to die for," says Erich Merkle, lead auto analyst for consulting firm Crowe Horwath LLP. "It has a little Aston Martin in the rear flank and an imposing front fascia that has an almost catlike presence. And it stands out from all the other vehicles on the road."

Best in Class is the BMW 535xi, a true value considering that its world-class BMW engineering and drivability, plus no-charge maintenance for the four-year warranty period, are all yours for about $54,000. Among Detroit entries, the new CTS-V looms large, with a beastly 6.2-liter, 556-hp V8 engine that nevertheless manages to eke out 24 mpg on the highway.

Among sports cars, the Nissan GT-R is turning heads and wins our Best New Sports Car award. The Porsche 911 Carrera is Best in Class. It looks the same on the outside but boasts a new direct-injection engine and optional seven-speed, double-clutch transmission (like a real race car). Also new this year: the sixth-generation Nissan Z, the 370Z, packing 26 extra horses. The all-wheel-drive Subaru Forester edges the Volkswagen Tiguan on resale value and fuel economy and wins as Best New Small Crossover.

The Nissan Rogue earns Best in Class. But you wouldn't go wrong with any number of small crossovers on our list, including the Ford Escape, Honda CR-V, Mazda CX-7, Saturn Vue, Suzuki Grand Vitara and Toyota RAV4. Among large and midsize crossovers, the Ford Flex takes Best New honors. Its retro, woodie-wagon looks and soft ride have won fans, but its most winning quality is its cavernous interior, including a third-row seat with plenty of head- and legroom for full-size people.

Best in Class is the MercedesPBenz GL320 BlueTEC, a clean-diesel version of the luxe GL450 that gets 23-plus mpg on the highway -- and qualifies for an $1,800 tax credit. The new Toyota Venza is also worth a look.

In the struggling truck-based SUV segment, the redesigned Jeep Liberty and Kia Borrego are the only new entries, and the blingy Borrego gets Best New designation. It's a comfortable, roomy people mover with seven seats and both a six- and an eight-cylinder option (the V8 version can tow 7,500 pounds).

Best in Class is the popular Toyota 4Runner, with plenty of cargo space and a towing capacity of 7,300 pounds for the V8 model. Four full-size SUV models have hybrid powertrains, with less-dismal fuel economy than their peers. Cadillac's Escalade Hybrid is the only luxury choice, with a luxury price tag of $72,000 to match.

The ultimate grocery-getter for our fuel-conscious times, the redesigned Toyota Matrix, earns our Best New Wagon award. For Best in Class we tapped the solid, safe, all-wheel-drive Subaru Impreza -- which has an impressive 44 cubic feet of cargo room. The Honda Odyssey, buoyed by high resale values, gets Best in Class minivan. Volkswagen is a new entry in the dormant category, and continues its puzzling-name game with the Routan. It's essentially a Chrysler Town & Country with different headlights and taillights and a VW interior. Baby-boomers and Gen Xers, perhaps imbued with nostalgia for microbuses, have been snapping them up.