Is Now the Time to Buy a New Car?

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So how are the rising fuel prices affecting East Tennessee car sales?

Volunteer TV's Gary Loe visited several dealerships and joins us with an unofficial sales report.

Several car salesmen say they're hearing those fuel price concerns by car buyers who are trading for better fuel economy, but dealership employees also say some customers are making those year-end buys just in case congress does not extend the sales tax deduction for 2007. The tax savings on a 2007 model Hummer H-3 could be a sizable amount for SUV buyers on Parkside drive in Knoxville, but if congress does not act to renew the provision within the next few days, the deduction will end this year.

People living in states without state income taxes -- like Tennessee -- can deduct state sales taxes instead under the expiring law.

"A lot of business owners need to use some tax money up at the end of the year, a lot of them will buy 2 of them, 3, they'll just buy a fleet of them for the business," said Trey Hawkins from Hummer of Knoxville.

Hummer buyers may get a big tax break, but they'll take a hit on gas mileage as pump prices begin to rise again. The best fuel-rated Hummer, the H-3 inline 5-cyclinder, gets 16 miles-a-gallon city, 19 on the highway.

"So, really haven't felt that yet, when it jumps over $3, might have a problem with it," Hawkins said.

Further west on Parkside drive, the Westside Honda general sales manager says his customers are trading gas-guzzling SUV's for more fuel efficient models. However, for maximum gas mileage, the Honda Hybrid Civic rates among the best cars on the road at 49 city and 51 highway miles-a-gallon.

"So we see always a good surge of business when the fuel prices start to rise," said Casey Lynn from Westside Honda.

Employees at both Honda and Hummer say December's always a prime month to buy with year-end close-out deals, but with the hefty tax incentive possibly ending, this December may be among their top sales months.

"We're looking to a big finish to the year," Lynn said.

Federal officials say people who itemized and took the sales tax deduction the past couple years in Tennessee saved an average of $313 per return. So, if congress ends the deduction, car buyers may save more by purchasing a vehicle this month, rather than waiting until the new year.