This is the first of a two-part series on “How to buy a car in today’s market”

The auto industry faces massive challenges as the retail market has changed relatively overnight. Consumers are holding off on making purchases, and almost every brand has seen a devastating drop in sales. The impact has been catastrophic, resonating through the full industry from factory to showroom, and hitting thousands of businesses in between. Combined, this historic downturn is creating unusual circumstances for the estimated 10 million consumers projected to be in the market for a new car this year. There are deep discounts available on cars today, but to make sure you get a great deal, rather than just accomplish the noble goal of stimulating the economy, do your research and proceed cautiously.

Car buying in winter 2009
There hasn’t been a more unusual time to buy a new car in this century. Hundreds of car dealers have closed their doors, and, sadly, many more will likely follow. Those that remain open are literally overflowing with inventory. Trade-in values are lower than when you bought your last car. Lease deals are harder to find and generally less appealing than in the past. And traditional financing is hard to get.

This is a rare moment in time, and one that may pass before summer. Right now, automakers have pulled the emergency brake on production, working to desperately balance out inventory with demand. The effect will be to bring down the dealer inventories to sustainable levels, at which point the incentives and willingness to negotiate will be reduced. (See the Best New Car Deals on Consumer Reports Recommended cars.)

Rest assured, this won’t be the last time great deals are offered, but it is certainly a sweet spot for anyone currently considering buying a new or used car. Most shoppers would be wise to consider a fuel-efficient car now while discounts are available and gas prices are relatively low; once inventories level out and gas prices rise, finding incentives on thrifty four-cylinder and hybrid models will be more difficult. Conversely, resist the temptation to buy an SUV, truck, or other thirsty model on the belief that gas will remain cheap. There is no basis for such an assumption, and cost of ownership should play an important role in the decision-making process, as many households have financial concerns.

Incredible deals can be found, but to make sure they remain smart choices for over your ownership period, go into the buying process with your eyes open.

See the latest deals on Consumer Reports Recommended cars.

Read "Car-buying tips for getting the best deal today," and read our complete new and used car buying advice sections.

—Jeff Bartlett