One of the most common questions we are asked is, “When is the best time to buy a car in order to get the best price.”
Published on August 3rd, 2020. Last Updated on .
One of the most common questions we are often asked is, "When is the best time to buy a car in order to get the best price?" The answer is December 31st of any year-read on to find out why...
This is a great question, in that the motivation of dealers, their management teams, and their respective salesmen can vary greatly, depending on the state of their business, and the day on the calendar. From a general perspective, vehicle shoppers can strike the best deal when dealer inventory levels are high, and things are quiet-but there is more.
Every day, sales managers look at their inventory, and determine what needs to sell fast. As a general rule, dealers are given a fixed number of days (usually 60-90) of a no-interest loan to sell a particular vehicle. After that period expires, the clock starts running, and the dealer will be charged interest for vehicles that are on their lot-yes, dealers finance vehicles too, as they buy them as soon as they hit their lot. With such, dealers keep very detailed records of how long each vehicle has been in their inventory, and as a vehicle ages on their lot, the more likely they are to sharpen their pencil, and give you a better deal.
There are two tricks to determining what vehicles have been in a dealer's inventory longer than others. The first is to look at the vehicle's ID number, or VIN (at the base of the windshield or inside the driver's door). The last six digits of the VIN will tell you the sequence in which the vehicle was built. The lower the number, the earlier it was built, and likely, the longer it has been in the dealer's inventory. For example, a VIN ending in 134026 was built much earlier than the same model with a VIN ending in 192850. The second trick is to look at the dealer's stock number, usually a sticker on the front windshield. As a general rule, dealers will simply assign stock number in sequence to vehicles as they come into their inventory. Similar to the VIN strategy, look for stock numbers which are lower than others to determine what vehicles have been in inventory longer. Importantly, both the VIN strategy and stock number strategy only work when looking at the same model, so don't mix Mustangs with Explorers.
Perhaps the biggest factor for you to get a better deal on your vehicle purchase can simply be found by looking at the calendar. Virtually ever month, manufacturers offer customers and even dealers, incentives to sell a particular vehicle line. As a common rule, these incentive programs almost always end on the last day of the month. Similarly, manufacturers will incentivize sales managers to reach sales targets on total sales, or just specific slow-selling models. These incentives to the dealers and managers can be big. When I was a manufacturers rep at Ford, we gave away hundreds of thousands of dollars of international trips, Rolex watches and other big prizes, as competitions between dealers-and the competitions always ended on the last day of the month. If you can, try to buy on the last day of the month, when sales managers are doing what they can to put another sale in the books.
December 31st, however, is the absolute best day to buy a vehicle. Not only do virtually all of the customer incentives, dealer incentives and sales manager contests mentioned above, all finish at the end of the year, but, from a financial perspective, all businesses want to be able to recognize the sale in that year, to improve their yearly financial performance-and the books close at the end of the day on December 31st. On top of all these reasons, some dealers are actually charged a state inventory tax, and have to pay a tax for all vehicles they own at the end of the year-yet another incentive for the dealers and their management teams to give you a better deal before the clock strikes midnight on the 31st.
So, if you have the flexibility when shopping for a vehicle, try to shoot for the end of the month to get a better deal, and if you're really flexible, hang out in the dealership showroom on New Years Eve with wads of cash in your back pocket. Go get 'em, and good luck.