Your wallet may already be reeling from holiday spending, but it’s worth your while to consider adding a purchase with a five-figure price tag to your list. Why? Because December is the cheapest time to buy a new car. In fact, if you’re looking for a bargain, six of the 10 best days to buy all year are between December 14 and the end of the year.
Buy in December
That’s the conclusion the car pricing experts at TrueCar reached when they crunched data from the last three years of pricing trends. “The average discount in December is around 6.5 percent off MSRP, compared to 4.5 percent in a typical month,” says Jesse Toprak, TrueCar vice president of Trends and Insights.
There is an old rule of thumb in the auto industry, Toprak explains, that says “the end of the week, the end of the month, and the end of the year” are the best times to buy. “Statistically speaking,” he tells us, “that actually turns out to be the case.”
Best Days to Buy in December
Date
Expected Average
Discount
12/14/2009
6.86%
12/16/2009
6.74%
12/21/2009
7.13%
12/24/2009
7.25%
12/28/2009
6.90%
12/31/2009
7.04%
Why would prices dip at the end of the year? Like so many things in the car shopping process, the phenomenon is psychological – but it has real impact on the financial health of car dealerships and shoppers.
The calendar hits 2010 next month. But for automakers, it’s been 2010 since mid-summer. Some of the earliest model year 2010 cars were rolling off of factory lines by July, and by now, dealerships are filled with cars with next year’s date on the window sticker.
But they also have plenty of 2009 cars left to sell -- more than in a typical year, in fact. That’s because automakers overbuilt, underestimating the impact of the recession on American buying habits. On Jan. 1, 2010, the value of those 2009 cars will drop because they will seem out of date. Dealerships want to get rid of them before that drop comes.
In reality, the differences between model years can be subtle. The 2010 Ford Fusion is a dramatically better car than the 2009 version, since Ford significantly modified its midsize sedan between model years. The 2010 Honda Accord LX, however, is virtually identical to the 2009. Honda lightened the color of the ventilation switches. That’s it. That’s the full list of changes. Yet, come January 1, the 2009 Accord will be worth thousands less than its 2010 counterpart -- so dealers are willing to negotiate this month to push the 2009s out the door.
There are a handful of exceptions to Toprak’s guidelines. Prices of some vehicles vary seasonally. Convertibles, for instance, are typically cheapest in colder months. All-wheel-drive and four-wheel-drive vehicle prices dip a little in the summertime. “But even with trucks,” he says, “buying an expiring model-year vehicle in December may be cheaper than buying the same truck in the summer,” when dealers don’t feel the pressure of January 1 looming.
Buy at the End of the Month
No matter what month you do your car shopping, Toprak says, you can still save money by timing your purchase carefully. Plan to buy, he says, late in the month. Dealerships are most willing to accept a lowball offer as the start of a new month rolls around.
“There is something called an Objective Bonus,” he explains, “that few shoppers seem to know about.” It’s a simple concept. Automakers set targets for their dealerships each month – “if they sell a certain number of units by the end of the month, they get a bonus from the automaker.” If you time your purchase for the last few days before the calendar switches over, you might find yourself negotiating with a dealer who knows he needs to sell just a few more cars to qualify for a big check from the home office – so he’s willing to take less from you in order to get one sale closer to his quota.
Buy on Saturday
The day of the week you go shopping can change the amount you’ll pay as well. In most weeks, TrueCar’s analysis shows, the biggest discounts tend to fall on Saturdays.
Car dealers are acutely aware of all the competition they face from other brands and even other dealerships selling the same brand. They know that when shoppers leave the house intending to make a purchase, they generally do.
“I ran dealerships for a few years,” Toprak says, before launching his career as an analyst. “The thinking at dealerships,” he explains, “Is that if you don’t give customers enough of a discount to close the deal on Saturday, they will go down the road somewhere else. They’re shopping on Saturday, and they intend to buy that day.”
Buy on a Holiday
Finally, TrueCar’s data shows you should consider car shopping when your neighbors are wrapping presents, or getting things ready for their party. Two of the least expensive days of the year are Christmas Eve and New Year’s Eve, when the average discount tops 7 percent off MSRP.
Maybe those commercials that propose giving a car as a Christmas gift aren’t completely crazy after all.
No comments:
Post a Comment