If you are looking for a deal on a new or used car, you may know that purchasing a vehicle near the end of the month can provide extra savings as dealerships attempt to meet sales quotas. The end of the calendar year and the end of the model year are other times when car deals are usually beyond compare.
But model year changes no longer uniformly happen in October, at least not for all manufacturers and for every vehicle. New models may reach showrooms at any time of the year and once that happens, discounting of the “older” models usually follows. Fortunately, consumers armed with online tools and dealer-specific website access can follow the model year changeover as it happens. And even though manufacturers may stagger their updates, by early October showrooms often reflect the new model year inventory.
The following tips provide ways for you to save money on a new or used vehicle at this time of the year.
The Next Generation Vehicle
When the next generation of a vehicle comes out, the previous generation usually receives special discounting as manufacturers help dealers clear their lots. Generational shifts usually come about every six or seven years, with year-to-year updates also accomplished.
When a manufacturer brings out a next generation model, customers usually flock to the new in a bid to enjoy the latest amenities, including in-dash and safety technologies. You will know that a vehicle is all-new because manufacturers tout that information. Further, if you visit the automaker’s website, you should find a link to the outgoing model. Click on the link and the accompanying discount information should also be provided.
The Discontinued Model
Every year a handful of models are discontinued. As those vehicles leave, special incentives are usually attached. Suddenly, nominal price cuts give way to deep discounting or strong financing incentives, with thousands of dollars in savings possible.
In the past year we have seen the Cadillac CTS Wagon discontinued, although the CTS sedan lives on. Also, the Acura TL was replaced by the TLX, the iconic Toyota FJ Cruiser made its last trail trek and the Nissan Murano Cabriolet was dropped as the 2015 Murano was released. If owning a discontinued model does not bother you, then keep your eyes on the additional models will soon ride off into the sunset.
The Orphaned Car
A discontinued brand such as Pontiac, Hummer and Saturn means that a slew of models were dropped at once. When General Motors canceled the trio, deep discounts accompanied each model sold. Fortunately for buyers, parts and service were never a problem as GM’s remaining brands stepped in. At present, there are no brands set to expire.
When a manufacturer gives up entirely on the market as Suzuki did in 2012, the unsold vehicles are known as “orphan cars.” Suzuki is still in business, but they quit the ultra-competitive U.S. market to focus on other markets. Orphaned cars are usually heavily discounted, but there is always the risk that service will become more difficult as the years pass, never mind the difficulty customers may have in procuring parts. As of this writing, there are no new orphan cars to be had, but that might change pending a manufacturer’s announcement. Used orphan cars are typically priced well below what competing models cost.
The most significant part of the inventory on new car dealer lots at this time of year are leftover models, vehicles that weren’t discontinued, orphaned or significantly updated. These cars are usually very similar to the new model year vehicles and are simply one year older.
Consumers have negotiating leverage with a new car from the outgoing model year. In particular, you need to take into account that a full year of depreciation has passed and the incentives from both the dealer and the manufacturer should reflect this. Moreover, leftover models become increasingly scarce as the calendar year draws to an end, but discounting typically increases month after month.
Used Car Bargains
In recent years, 16 to 17 million new cars have been sold annually. However, those numbers pale in comparison to the more than 25 million used vehicles that change hands every year. Naturally, many of those used models can be found on dealer lots as customers make trade ins. Dealers will also bolster their inventories through returning lease and fleet vehicles, in addition to auction purchases.
At first glance, there does not seem to be a pattern for finding deals on used vehicles. But on closer inspection those very same fleet and lease vehicles that are turned in are the ones that the manufacturers want to help move. They are known as certified pre-owned (CPO) vehicles, models that are reconditioned and must pass a multipoint inspection program. CPOs may also be comprised of certain late model trade-ins.
Qualified cars are then offered for sale with manufacturers providing special-rate financing, cash back or other incentives to move late-model used car inventory. At CARFAX, we provide an updated list of the latest deals for that month. If you are looking for used car bargains, a CPO vehicle might be right for you.
You might also keep track of automotive trends when considering used. For instance, as demand shifts to utility vehicles, customers may trade in their coupes and sedans for these high-profile vehicles. That usually means that demand for used SUVs is up and used vehicle prices rise with it. On the other hand, you may find better deals for non-SUVs as demand for those vehicles ebb.
Lastly, when shopping for a used vehicle, complete a test drive and then ask the salesperson to show you the evidence jacket (also known as the value folder or inventory dossier) for that vehicle. In that report, the dealer will disclose certain information about the vehicle, including the make, model, model year, mileage, color and equipment. It should also explain what work was done as part of the reconditioning process. Finally, it should include a CARFAX Vehicle History Report, detailing repairs, recalls and accident information. That’s information you need to make an informed purchase decision.