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Oversupply means new car bargains

The days of RRP are done and the car business is more like a reverse auction...

The boats keep on coming. The roll-on, roll-off battleships are docking every week in Australian ports, fresh from Europe, Asia and America, and they're delivering deals just as much as unloading cars.

Right now, the volume of boat business means a huge backlog of unsold cars of all sizes, prices and body styles. A Carsguide check, using confidential industry information and background from the Deloitte consultancy, reveals as many as 150,000 unsold cars are "sitting on grass".

Many are in dealer stock, lots are in company compounds and no one is game to turn the boats back for fear of handing an advantage to a rival brand. "Nissan has 32,000," one senior executive tells Carsguide.

Says another: 'Most brands have 30-60 days' stock. If you say the monthly industry sales rate is 85,000 cars, on average, that's an awful lot of stock." This overstocking means prices have never been better and the deals are not going to end for a long time. They can't, when some companies are holding more than two years' stock of their unpopular models.

'How can companies sell cars cheaper in Australia than in Europe?" asks new Holden president Gerry Dorizas. 'It's not sustainable. I believe they (prices) will go up at some point in time. At some time this competition for prices will create a problem in the network." But that point has not arrived and car companies are rolling out new incentives with every passing week. We've gone from drive-away pricing and low-rate finance to cash incentives delivered through an Eftpos card in the latest rounds of dollar deals.

Finding a cut-price package is easy but the obvious contenders are the companies with the most to win, and lose, and many of them are clustered around the critical $15,000 and $20,000 price points. So that means great buying on cars like the Nissan Pulsar and Mitsubishi Lancer, which have even sucked rivals as good as the Volkswagen Golf and Polo into the discount battle.

The bottom line is simple. The days of RRP are done and the car business is more like a reverse auction - a race to the bottom - that means buyers have the power.

 

Hyundai i20 - see other verdicts

Price: from $15,590

Star rating: 3/5

Engine: 1.4-litre 4-cyl, 73.5kW/136Nm

Transmission: 6-speed man, 4-speed auto; FWD

Thirst: 4.2L/100km

 

 

THE LOWDOWN A long string of sales means the i20 is now permanently parked in the $14,990 slot, usually with free on-road costs, and that makes it a good choice for a good car. It's not great, or as chic as some rivals, but the value is unbeatable with solid reliability and five-year warranty.

 

Nissan Pulsar sedan - see other verdicts

Price: from $19,900

Star rating: 3/5

Engine: 1.8-litre 4-cyl, 96kW/174Nm

Transmission: 6-speed man, CVT auto; FWD

Thirst: 6.7L/100km

 

 

THE LOWDOWN The most overstocked brand in the business is doing everything it can to clear a huge backlog of Pulsars. That means the RRP is just the starting price for any negotiation, with at least a $1000 discount and some sort of incentive commonplace. The Pulsar is good, but not good enough to rattle classy rivals including the Mazda3 and VW Golf.

 

Suzuki S-Cross - see other verdicts

Price: from $22,990

Star rating: 3.5/5

Engine: 1.6-litre 4-cyl, 86kW/156Nm

Transmission: 5-speed man, CVT auto; FWD

Thirst: 5.8L/100km

 

 

THE LOWDOWN The newest Suzuki is already being boosted with drive-away pricing, which is more a reflection of the showroom situation than anything missing from the car. It's the first new model from Suzuki for far too long, with classy crossover styling, but drops into a torrid small-SUV class filled with impressive contenders and dollar deals.

SECOND-HAND

Anything with a five-year warranty looks good for bargain hunters. Lots of companies flip their fleets after three years, which means a second-hand choice now comes with the remainder of its factory warranty. Just be careful, because some government cars running through auction houses have a shorter warranty life.

Looking at the near-new choices, the Kia Rio looks smart and smart buying. It was the Carsguide Car of the Year in 2011 and that means the basics that got it the gong, from solid onroad performance to the fit-and-finish work in Korea, should also make it a handy near-new purchase.

This reporter is on Twitter: @PaulWardGover
 

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