In the coming months, those shopping for new cars are likely to see a range of makes and models competing for their attention. Many will offer style, comfort and efficiency, and some will even lure buyers in with extra cash on the hood.

KBB's Analytic Insights team anticipates an incentive war in the final months of this year, giving car buyers an excellent value in a new car purchase. In their monthly Blue Book Market Report for September, KBB says Japanese manufacturers will spark the competition to attract customers through cash rebates and special lease terms. The firm, which gathers and analyzes transaction data from dealers nationwide, predicts that other manufacturers will follow.

Before a devastating earthquake and tsunami struck Japan in March, Japanese manufacturers claimed 40 percent of US sales. Market share has since dropped to 30 percent as Japanese production was hit hard by the disaster. Now factories are bouncing back, and newly redesigned models are arriving or on the way. KBB predicts Japanese manufacturers will offer significant incentives to recapture the lost market share.

Domestic and Korean manufacturers have largely picked up the sales that Japanese firms aim to recover. However, KBB says Korean carmakers are unlikely to compete on incentives; their production capacity cannot absorb additional demand for dealer inventory. But KBB thinks domestic automakers will retaliate with rebates and incentives of their own to stay competitive. Like the Japanese, the domestics also have newly designed and best-selling models.

On his website beatthecarsalesman.com, consumer advocate and former car salesman Michael Royce writes "a rebate is simply free money given to you by the automobile manufacturer as an incentive to buy that particular car? so take the money and smile." If Kelley Blue Book's prediction of a coming incentive war among manufacturers is accurate, car buyers may soon get to take his advice.

author photo

Nick Palermo is an automotive writer and lifelong car nut. He follows new and late-model used vehicles for AutoTrader.com, writes about vintage cars for Hemmings Classic Wheels and blogs on all things automotive at LivingVroom. He lives in Atlanta with his wife and twins.

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