4/15/2011 1:59 PM ET|
The best time to buy a car
Advice on when you can get the best deals on a new vehicle is plentiful -- and often wrong. Here's what you really need to know to save money.
You've heard all the advice about the best time to buy a car, and now you're eager to bounce into a showroom and snag a killer deal. But it's not that easy:
There's no particular part of any month when you're guaranteed to get the best bargain.
There's no one day of the week when dealers will be most open to lowball offers.
There are just as many people who think you'll get a good deal in the early morning as those who think the day's end is when the salespeople get sleepy, sloppy or desperate to make great deals.
All that, however, doesn't mean you can't save by gauging the timing of your transactions and being aware of market forces. And keep in mind that the rules are different for new cars versus used cars.
The tax-time used-car bubble
Steven Lang, who runs a dealership and an auto auction in the Atlanta area and writes for TheTruthAboutCars.com, says the used-car market is particularly sensitive around the time Americans are getting their tax refunds.
"From mid-February through early June, the auto industry goes through an event called tax season," Lang says. "Folks receive their refund checks from the IRS, which in turn creates a nice little bubble of activity in the used-car industry."
As evidence of this bubble, Lang cites the prices paid for used cars at auction during March and April. "Compared to three months (earlier), I would estimate cars sold between $700 and $1,500 higher than what was then the market price," he says.
It makes sense that with tax refunds in hand, many people have the chance to put a down payment on a used car or buy a used car outright. So that's when a lot of buyers are out there. And when there are a lot of buyers and supply doesn't increase, prices go up.
"I'd say used-car dealers have done two-thirds of their business for the year by the Fourth of July weekend," Lang says. "The best time to buy is October or the beginning of November. There are no holidays then. No one is getting their bonuses. And the inventory is depleted. Wholesale prices are down then, too. It all reflects the retail climate."
The new-car market isn't as sensitive to the tax-refund bubble. In fact, according to data from Edmunds.com, during 2010, new-car transaction prices showed the greatest discounts in March and July. April and May were close behind.
The end of the month may not matter
"There's some truth to the idea that new-car dealers may make better deals at the end of the month," says Phil Reed of Edmunds.com. "But people shouldn't think that a little tip like that alone will get them a great deal."
New-car sales are greatly influenced by manufacturers -- both by what incentives and financing programs they have in place and by production rates and the resulting size of their inventories. Sometimes such incentives or other sales promotions run out at the end of a month, and it may be in a dealership's interest to make a better deal then.
But a lot of buyers believe they can get better deals at the end of the month. That means more people are chasing cars at the same time. And more buyers chasing the same number of cars means dealers have less incentive to offer bargains.
Beyond that, there's nothing that says manufacturers have to end their incentives at the end of the month; they can end them any time they please. The trick is to know what the incentives are and when they're in place.
"People who think they'll get a better deal on rainy days and such are just being silly," Reed says. Dealers don't throw their business sense overboard just because it's a little damp outside, and they can wait out a cloudburst.
"It's easier to shop when there's nobody else on the lot," Reed says. "So being the first customer of the day may not be a bad idea. But that's not going to necessarily save you a lot of money."
Shopping late in the day or on weekends can be a hassle because a lot of people fresh from work may be there doing the same thing. And there are few things less pleasant than sitting in a busy showroom for hours trying to complete a purchase.
Do the wrong thing
"If it weren't for the recent tsunami in Japan, I'd think you'd be able to get a great deal on a Toyota Yaris," Lang says.
According to Ward's Auto, Toyota had enough of its not-so-popular Yaris subcompacts on hand in early March to last for 105 days of sales. In comparison, Toyota had only 32 days' worth of Prius hybrids. That meant getting a great deal on a Yaris would've been much easier than finding a heavily discounted Prius.
But the March 11 earthquake and tsunami in Japan dramatically reduced Toyota's homeland production. So even fewer Prius models are available, and the inventory of Yaris models has been eaten away. It also doesn't hurt that the Yaris gets solid fuel economy at a time when gas is headed up beyond $4 a gallon. The window of opportunity to get a great deal on a Yaris is likely closing.
"The way to get ahead is to do the unpopular thing," Lang says. "Buy the car no one else wants while its inventory is piling up."
So follow the news, adjust your expectations and buy an unpopular car when it's in great supply.
The new and old bargains
Last year, Chevrolet was on the verge of replacing its unloved Cobalt with the new Cruze. In order to keep Cobalt sales moving and the Lordstown, Ohio, plant that built it humming, General Motors put large incentives on it.
"Cobalts were going out the door for $9,995, with $4,000 worth of incentives," Lang recalls.
Older designs facing the end of their production lives are often the most heavily discounted by their manufacturers, so it's good to follow what's coming up. For instance, Honda has announced that a new Civic is coming for the 2012 model year. Right now may be the best chance ever to get one of the current, popular and well-designed 2011 Civics at a discount.
On occasion, however, a new model may be the best deal. When a carmaker is entering a part of the market it's never been in before, it may discount the new product substantially to gain market share. The most notable example of that was in 1990, when Toyota was determined to establish its then-new Lexus brand and was selling the exquisite LS 400 luxury sedan for about $35,000 -- at least $10,000 less than comparable models from Mercedes or BMW.
More recently, Hyundai kept down the price of its Genesis as it sought to enter the luxury market. And Kia has been aggressive in pushing its redesigned Sorento, a small SUV, as it opened a factory in West Point, Ga., that greatly expanded production capacity.
The market for cars is, like the market for every other commodity, one that's driven by information -- imperfect, muddled and contradictory information. So keep abreast of the news, cruise the manufacturers' websites to look for big-money incentives and open yourself up to considering unpopular vehicles that may be great bargains.
The better you know what's going on in the market, the better you'll know when is the best time to strike and make your purchase.
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Our family doesn't buy new cars anymore....Only used cars
Need our money for more important family needs, food, fuel, rent, insurance, utilities..
I have owned many vehicles in my many years of driving.. Both new and used.. And I have had my share of crappy ones (both new and used) and excellent ones (again both new and used)...
Just because it is new doesn't mean it is the best.. Only that the warranty will take care of any problems without money out of your pocket...
It all depends on what type of vehicle you are buying and how old and beat up it is...Or on the flip side what type of vehicle in a newer model and how bad you want it....
If you bought a new vehicle and had a payment of $350 and had no problems for 1 year you paid $4200 for that vehicle that year... On the same token say you bought a used one and had a payment of $200 and had to spend $1000 on the vehicle you would have paid $3400 for the vehicle that year..AND had a savings of $800.....
So it all depends on what you can afford (or think you can afford) and what is best for you...
Buying a used car is a risk, my father always looked at it as buying someone else's problem. I did buy a used toyota Pick Up (1983), I bought it in 1984. Many problems with that Toyota. I worked on it to keep it running, 10 years or so later, I bought a new truck. I bought a Dodge Ram Truck. I never bought used again. As for the Toyota, I sold it to a guy that gave it to his son. He had problems like I did..
Today the used cars might be a safer risk, but I hate to gamble. I'll stick to a new vehicle.
I will never touch a used car again- as long as I have a little money in my pocket.
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