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Need a New Car? Now may be the best time to shop for one
Buying a car is a significant financial decision, and choosing the right time to make this purchase can save you thousands of dollars. The automotive market, much like any other, is driven by supply and demand, seasonal trends, and cyclical industry patterns. In this blog, we will explore how to quantify the best time to buy a car by examining historical sales trends, dealership incentives, economic conditions, and buyer preferences. Additionally, we will delve into the decision-making process for choosing the right car for your needs.
Understanding the Timing: When to Buy a Car?
Several key periods consistently provide buyers with opportunities to save money on a new or used vehicle. By analyzing these periods, you can strategically plan your purchase.
1. End of the Year: December Discounts
The most widely acknowledged best time to buy a car is at the end of the year, particularly in December. During this period, dealerships are highly motivated to clear out their inventory to make room for new models and meet end-of-year sales quotas. According to a comprehensive guide by Kelley Blue Book, the final week of December, especially December 30 and 31, tends to offer the steepest discounts. Kbb.com
Automakers often run promotions during the holiday season, including cash rebates and lower interest rates, to entice customers who are shopping for year-end deals. Additionally, many dealerships are more willing to negotiate lower prices, even if it means taking a loss, to reach their sales goals. For example, a young woman in Florida managed to pit multiple dealerships against each other and scored a significant discount on a Honda Civic on New Year’s Eve. Kbb.com
2. End of the Month or Quarter Sales: Another peak time for car deals is the end of the month or quarter. Similar to the end of the year, dealerships are eager to meet their sales targets and may offer more incentives and discounts during these times. According to KBB.com, some dealerships have been known to offer up
For those who can’t wait until December, the end of any month or quarter also presents good opportunities to negotiate a better deal. Dealerships often have monthly sales quotas, and salespeople may receive bonuses for hitting targets. This puts extra pressure on them to close deals toward the end of the month, making it an ideal time for buyers to step in and negotiate. As reported by U.S. News & World Report, salespeople are more willing to reduce prices to secure a sale at the end of the month. NewCars.com
To quantify the savings, it’s essential to research manufacturer-to-dealer incentives that may not be widely advertised. These incentives vary based on the automaker, model, and region but can significantly lower the price if the dealership is trying to meet a sales target.
3. Model Year Changeovers: July to October
Another prime time to buy a car is during model year changeovers, typically from July through October. During this period, dealerships are trying to move older models to make space for new arrivals. Buying a current-year model when the next year’s version is about to hit the market can result in substantial savings, sometimes thousands of dollars, especially if the changes in the new model are minor. NewCars.com
For instance, if a car undergoes only cosmetic changes in the new model year (e.g., different colors or slight design tweaks), it might be wise to opt for the outgoing model. You’ll save money upfront, though the trade-off is a slightly lower resale value in the future. However, for many buyers, the initial savings far outweigh the small depreciation difference.
4. Holiday Sales Events
Automakers often tie major sales promotions to holidays like Memorial Day, July 4th, and Labor Day. These events, heavily promoted through advertising, provide additional incentives, such as rebates, low-interest financing, and special lease deals. The weekends around these holidays are busy, but for good reason—buyers can secure attractive deals. Kbb.com / NewCars.com
Quantifying the savings during holiday sales requires a bit of homework. Research the manufacturer’s website and check for promotions specific to your region. It's also wise to compare multiple dealerships to find the best offer.
‍
Economic and Industry Factors
Apart from dealership cycles and sales events, broader economic conditions also play a role in determining the best time to buy a car. Monitoring these factors can help you time your purchase effectively.
1. Interest Rates and Inflation
When interest rates are low, financing a car becomes more feasible. Federal Reserve policies and market trends often dictate the interest rates offered by banks and automakers. Therefore, timing your purchase when interest rates are favorable can save you significantly on financing costs over the life of the loan. Kbb.com
In periods of rising inflation, automakers may pass on higher production costs to consumers, leading to price increases. Buying before a forecasted inflation spike can lock in a lower price.
2. Supply Chain Disruptions
Recent events, such as the global semiconductor shortage, have affected the automotive supply chain. These disruptions limit inventory and drive up prices, particularly for new cars. However, used car prices have also surged in response to supply constraints. NewCars.com
Understanding these supply-side factors can help you decide whether to wait for better conditions or buy sooner to avoid further price hikes.
‍
How to Choose the Right Car
Once you’ve quantified the best time to buy, the next challenge is selecting the right vehicle. Here’s how to make an informed decision:
1. Budget Considerations
Before anything else, determine how much you’re willing to spend. This includes the purchase price, but also ongoing costs such as insurance, fuel, maintenance, and taxes. A good rule of thumb is to spend no more than 15% of your monthly income on car-related expenses.
2. New vs. Used
Deciding between a new and used vehicle depends on your budget and preferences. New cars come with the latest technology, warranties, and safety features, but they depreciate rapidly in the first year—up to 20-30%. NewCars.com
Used cars, especially certified pre-owned (CPO) vehicles, offer a more affordable alternative while still providing a warranty. A two- to three-year-old car often strikes a balance between cost savings and reliability.
3. Resale Value
Some cars hold their value better than others. Brands like Toyota and Honda are known for their high resale values, meaning they depreciate more slowly than other makes. If resale value is a priority, research vehicles with strong demand in the used car market.
4. Fuel Efficiency
With fluctuating fuel prices, it’s worth considering the fuel efficiency of the vehicle you choose. Electric and hybrid vehicles are becoming increasingly popular, offering savings on fuel and potential tax incentives.Â
5. Safety and Technology Features
Modern vehicles come equipped with various safety features, including advanced driver-assistance systems (ADAS), lane-keeping assist, and automatic emergency braking. Consider which features are essential for your peace of mind and driving habits.Â
‍
Conclusion: Timing and Preparation Are Key
Quantifying the best time to buy a car requires a mix of understanding dealership sales cycles, economic conditions, and personal financial preparedness. By timing your purchase during periods like the end of the year, end of the month, or during model year changeovers, you can save thousands of dollars. Moreover, knowing what car to buy depends on your budget, preferences, and long-term needs.
Doing your research, comparing prices, and negotiating aggressively can turn the car-buying process into a financially rewarding experience.Â
‍
Happy car shopping!
Meet
Jacob DuBose
Hello there! 👋🏼 I'm Jacob, a seasoned wealth advisor at Savvy with over two decades of experience. My journey began in the tech sales industry, where I developed a keen interest in the decision-making process and financial planning. I’m here to help you reach your financial goals.
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Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation. Information was obtained from sources believed to be reliable but was not verified for accuracy. It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.
Savvy Wealth, Inc. (“Savvy Wealth”) is a tech company and the parent company of Savvy Advisors, Inc, (“Savvy Advisors”). All advisory services are offered through Savvy Advisors, Inc., an investment advisor registered with the Securities and Exchange Commission (“SEC”). For the purposes of this blog article, Savvy Wealth and Savvy Advisors may be referred to together as “Savvy”.
‍
Need a New Car? Now may be the best time to shop for one
Buying a car is a significant financial decision, and choosing the right time to make this purchase can save you thousands of dollars. The automotive market, much like any other, is driven by supply and demand, seasonal trends, and cyclical industry patterns. In this blog, we will explore how to quantify the best time to buy a car by examining historical sales trends, dealership incentives, economic conditions, and buyer preferences. Additionally, we will delve into the decision-making process for choosing the right car for your needs.
Understanding the Timing: When to Buy a Car?
Several key periods consistently provide buyers with opportunities to save money on a new or used vehicle. By analyzing these periods, you can strategically plan your purchase.
1. End of the Year: December Discounts
The most widely acknowledged best time to buy a car is at the end of the year, particularly in December. During this period, dealerships are highly motivated to clear out their inventory to make room for new models and meet end-of-year sales quotas. According to a comprehensive guide by Kelley Blue Book, the final week of December, especially December 30 and 31, tends to offer the steepest discounts. Kbb.com
Automakers often run promotions during the holiday season, including cash rebates and lower interest rates, to entice customers who are shopping for year-end deals. Additionally, many dealerships are more willing to negotiate lower prices, even if it means taking a loss, to reach their sales goals. For example, a young woman in Florida managed to pit multiple dealerships against each other and scored a significant discount on a Honda Civic on New Year’s Eve. Kbb.com
2. End of the Month or Quarter Sales: Another peak time for car deals is the end of the month or quarter. Similar to the end of the year, dealerships are eager to meet their sales targets and may offer more incentives and discounts during these times. According to KBB.com, some dealerships have been known to offer up
For those who can’t wait until December, the end of any month or quarter also presents good opportunities to negotiate a better deal. Dealerships often have monthly sales quotas, and salespeople may receive bonuses for hitting targets. This puts extra pressure on them to close deals toward the end of the month, making it an ideal time for buyers to step in and negotiate. As reported by U.S. News & World Report, salespeople are more willing to reduce prices to secure a sale at the end of the month. NewCars.com
To quantify the savings, it’s essential to research manufacturer-to-dealer incentives that may not be widely advertised. These incentives vary based on the automaker, model, and region but can significantly lower the price if the dealership is trying to meet a sales target.
3. Model Year Changeovers: July to October
Another prime time to buy a car is during model year changeovers, typically from July through October. During this period, dealerships are trying to move older models to make space for new arrivals. Buying a current-year model when the next year’s version is about to hit the market can result in substantial savings, sometimes thousands of dollars, especially if the changes in the new model are minor. NewCars.com
For instance, if a car undergoes only cosmetic changes in the new model year (e.g., different colors or slight design tweaks), it might be wise to opt for the outgoing model. You’ll save money upfront, though the trade-off is a slightly lower resale value in the future. However, for many buyers, the initial savings far outweigh the small depreciation difference.
4. Holiday Sales Events
Automakers often tie major sales promotions to holidays like Memorial Day, July 4th, and Labor Day. These events, heavily promoted through advertising, provide additional incentives, such as rebates, low-interest financing, and special lease deals. The weekends around these holidays are busy, but for good reason—buyers can secure attractive deals. Kbb.com / NewCars.com
Quantifying the savings during holiday sales requires a bit of homework. Research the manufacturer’s website and check for promotions specific to your region. It's also wise to compare multiple dealerships to find the best offer.
‍
Economic and Industry Factors
Apart from dealership cycles and sales events, broader economic conditions also play a role in determining the best time to buy a car. Monitoring these factors can help you time your purchase effectively.
1. Interest Rates and Inflation
When interest rates are low, financing a car becomes more feasible. Federal Reserve policies and market trends often dictate the interest rates offered by banks and automakers. Therefore, timing your purchase when interest rates are favorable can save you significantly on financing costs over the life of the loan. Kbb.com
In periods of rising inflation, automakers may pass on higher production costs to consumers, leading to price increases. Buying before a forecasted inflation spike can lock in a lower price.
2. Supply Chain Disruptions
Recent events, such as the global semiconductor shortage, have affected the automotive supply chain. These disruptions limit inventory and drive up prices, particularly for new cars. However, used car prices have also surged in response to supply constraints. NewCars.com
Understanding these supply-side factors can help you decide whether to wait for better conditions or buy sooner to avoid further price hikes.
‍
How to Choose the Right Car
Once you’ve quantified the best time to buy, the next challenge is selecting the right vehicle. Here’s how to make an informed decision:
1. Budget Considerations
Before anything else, determine how much you’re willing to spend. This includes the purchase price, but also ongoing costs such as insurance, fuel, maintenance, and taxes. A good rule of thumb is to spend no more than 15% of your monthly income on car-related expenses.
2. New vs. Used
Deciding between a new and used vehicle depends on your budget and preferences. New cars come with the latest technology, warranties, and safety features, but they depreciate rapidly in the first year—up to 20-30%. NewCars.com
Used cars, especially certified pre-owned (CPO) vehicles, offer a more affordable alternative while still providing a warranty. A two- to three-year-old car often strikes a balance between cost savings and reliability.
3. Resale Value
Some cars hold their value better than others. Brands like Toyota and Honda are known for their high resale values, meaning they depreciate more slowly than other makes. If resale value is a priority, research vehicles with strong demand in the used car market.
4. Fuel Efficiency
With fluctuating fuel prices, it’s worth considering the fuel efficiency of the vehicle you choose. Electric and hybrid vehicles are becoming increasingly popular, offering savings on fuel and potential tax incentives.Â
5. Safety and Technology Features
Modern vehicles come equipped with various safety features, including advanced driver-assistance systems (ADAS), lane-keeping assist, and automatic emergency braking. Consider which features are essential for your peace of mind and driving habits.Â
‍
Conclusion: Timing and Preparation Are Key
Quantifying the best time to buy a car requires a mix of understanding dealership sales cycles, economic conditions, and personal financial preparedness. By timing your purchase during periods like the end of the year, end of the month, or during model year changeovers, you can save thousands of dollars. Moreover, knowing what car to buy depends on your budget, preferences, and long-term needs.
Doing your research, comparing prices, and negotiating aggressively can turn the car-buying process into a financially rewarding experience.Â
‍
Happy car shopping!
Meet
Jacob DuBose
Hello there! 👋🏼 I'm Jacob, a seasoned wealth advisor at Savvy with over two decades of experience. My journey began in the tech sales industry, where I developed a keen interest in the decision-making process and financial planning. I’m here to help you reach your financial goals.
Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation. Information was obtained from sources believed to be reliable but was not verified for accuracy. It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.
Savvy Wealth, Inc. (“Savvy Wealth”) is a tech company and the parent company of Savvy Advisors, Inc, (“Savvy Advisors”). All advisory services are offered through Savvy Advisors, Inc., an investment advisor registered with the Securities and Exchange Commission (“SEC”). For the purposes of this blog article, Savvy Wealth and Savvy Advisors may be referred to together as “Savvy”.
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