Rodney Leonard, a 37-year-old corporate procurement manager for the Coca-Cola Bottlersâ€™ Sales and Services Co. L.L.C., was racking up close to 200,000 miles on his aging 1995 Toyota Land Cruiser when he decided to shop for a new vehicle. Since he wanted a vehicle that was capable of towing his new boat, he decided to look at the GMC Yukon Denali. Leonard knew GMC was coming out with an upgraded 2007 model in March, but he wasnâ€™t willing to pay the list price. Instead, he opted for a 2006 model.
The Denali Leonard purchased listed for $54,500. The dealer needed to move inventory, so he took $6,356 off the sticker price. Leonard saved an additional $5,000 with a factory rebate. In the end, the negotiated price for the vehicle was $43,144. His decision to purchase last yearâ€™s model rewarded him with an overall cost savings of $11,356.
Industry experts and media coverage tell us that December is the best time of the year to purchase a new vehicle since dealers want to avoid paying taxes on inventory that will be carried over into the next year. However, based on data provided by the Power Information Network, a division of J.D. Power and Associates that collects and analyzes transaction data in the new and used vehicle industry, this is not always true.
For instance, in July 2006, the average new vehicle incentive — a rebate, special financing, or other offer used by automakers or dealers to entice a consumer to buy a new vehicle — hit a record high for the year at $2,708 per every vehicle sold. In December 2005, the average incentive was $2,586.
Why were incentives higher in July than in December? According to Tom Libby, senior director of industry analysis for the Power Information Network, there has been a shift toward smaller cars and crossovers, vehicles that combine the attributes and looks of one car platform with the performance aspects of another. “Domestic brands are lagging behind the Asian automakers in their offerings in small cars and crossovers,” says Libby. “This is putting pressure on the domestic automakers to continue using incentives for mid-sized SUVs, full-sized SUVs, and full-sized pickups, pushing up incentive amounts overall.” Although incentives can be one determining factor in buying a new vehicle, it is not the only tool consumers should use to ensure that they are getting the best deal possible. BLACK ENTERPRISE highlights a number of other variables for you to consider:
IN WITH THE OLD
If youâ€™re like Leonard, and not concerned about having the latest styling and gizmos, then youâ€™re almost guaranteed to keep money in your pocket by buying last yearâ€™s model when a model changes its designs or adds new features.
September is usually the time when most new cars are introduced. This September, for example, Jaguar and Mercedes dealers were offering incentives to make room for their 2007 coupes. Jaguar offered incentives up to $9,000 on its 2006 XK-Series and Mercedes offered incentives up to $15,000 on its 2006 CL-Class.
To gauge a dealerâ€™s willingness