The Best Time To Buy A Car

Rodney Leonard, a 37-year-old corporate procurement manager for the Coca-Cola Bottlers’ 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 wasn’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 year’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 you’re like Leonard, and not concerned about having the latest styling and gizmos, then you’re almost guaranteed to keep money in your pocket by buying last year’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 dealer’s willingness to move a vehicle, ask the following questions: When will a new body style be introduced? Are you offering special incentives to clear out inventory on any particular models?

SEASONAL SHOPPING
“Shopping against the season is also a great time to buy,” states Philip Reed, consumer advice editor for Edmunds.com. For instance, in the winter months in the Northeast, a dealer may be willing to significantly discount convertibles from several hundred to several thousand dollars due to a decreased demand for the vehicle.

ECONOMIC CONDITIONS
“Anytime an automaker is offering a rebate on a vehicle, this probably means the vehicle is not selling quickly or the dealers are probably overstocked,” says Reed. Events that affect the economy, such as 9-11 or a hurricane, can also affect the automotive industry. “Shortly after Hurricane Katrina, gas prices rose and demand for full-sized SUVs declined,” says Libby.

As gas prices rose, so did the average incentive on trucks and SUVs: from $3,126 and $2,628, respectively, in October 2005 to $3,567 and $3,050 in November 2005. If you can afford to fill up the tank of a large SUV or full-sized truck, you may want to consider taking advantage of the deals many automakers will offer as long as gas prices are hovering around $3 a gallon. Some automakers and dealers may also offer free gas cards to help offset the high gas prices.

TIMING IS EVERYTHING
The end of the month or the end of year can be a great time to maximize savings. Waiting for the right time of the month paid off for Malvene Townsend, a 73-year-old retired public school teacher for Milwaukee Public Schools, who decided to buy a new Honda Accord LX in February and donate her 1995 Buick Skylark to a local agency that helps troubled teens. After shopping around and consulting with a close family friend in the auto industry, she decided to wait until the end of the month before making her move.

Initially, Townsend wavered between buying the newly redesigned Honda Civic or the Honda Accord. Because

of the popularity and limited supply of Civics in Milwaukee, dealers were only willing to discount the vehicle $500. The dealers in the area had a greater supply of Accords, and therefore, were willing to offer her $2,000 off of the sticker price. (Note: It’s rare that Honda offers rebates on its vehicles since the discount structures on many of its cars are significantly less than some of the other automakers. Instead, Honda dealers may offer special financing or other incentives to remain competitive.)

If an automaker is running below its targeted sales goal, incentives such as low-interest financing, special lease rates, free gas, and deferred payments may be offered to stimulate sales. According to Darryl Ford, owner and general manager of Stone Mountain Chrysler-Jeep-Dodge in Stone Mountain, Georgia, “Manufacturer-imposed quotas and urgent advertising themes help to drive traffic at the end of the month. If I am a couple of cars away from meeting my objective, I’ll make some great deals.” In addition, Honda and Toyota have been known to offer additional incentives to meet yearly sales goals and targets.

So, holding off until the end of the month could pay off, unless you’re buying a popular or limited production vehicle, such as the 2007 Pontiac Solstice roadster, the 2007 Ford Mustang Shelby GT500, or the 2007 Lexus LS460.

GOOD DEALS ANYTIME
To find the best deals, periodically scan the automotive sections of your weekend newspaper and compare prices. If you live in a rural community, consult your area’s nearest major metropolitan paper for the best car deals. Also, go online to read the “Autos Insider” section of the Detroit News (www.detnews.com) for auto industry news and upcoming promotions. Check the site the first and last week of each month.
A savvy consumer can capitalize on the opportunity by looking for buzzwords like production cuts and falling sales.

To find the hottest-selling vehicles every month and their average selling price, pick up a copy of The Wall Street Journal on the second Thursday of every month and check out the “Hot Off the Lot” column. Because of the popularity of the vehicles listed in the WSJ, you may not have much room for negotiation off of the sticker price.
As with buying stocks or a home, there is no one thing that determines the best time to purchase a vehicle. However, there are a number of tools that can help you maximize your savings and remain in the driver’s seat. Shop around for the best deal and do your homework before making your next purchase. If dealers are offering great deals on their new vehicles, just imagine how much can be saved on a comparable pre-owned vehicle. Being patient could equal extra money in your pocket! As Judge Mab

lean Ephriam, formerly of Divorce Court, often said, “Look deep before y
ou leap.”

OLD VS. NEW
OLD VS. NEWGMC Yukon Denali All-Wheel-Drive Sport Utility

Â	2006 MSRP	 2007 MSRP
Base Price	$50,185	$47,990
Destination	875	875
Option Total	3,440	3,140
Total Price	54,500	52,005
Less Rebate	-5,000	0
Dealer Discount	-6,356	0*
March’s Negotiated Price	$43,144	$52,005

*If the vehicle is an all-new body style and selling rapidly (as in the case of the 2007 Yukon Denali in March), the dealer may offer a slight discount or no discount at all. Pricing discounts on the 2007 Yukon Denali will vary based on consumer demand and the number of vehicles the dealer has in inventory.
SOURCE: GMC

 

THE SCOOP ON WHAT MANUFACTURERS ARE OFFERING

AVERAGE INCENTIVE SPENDING

Â	Jan 06Â	Feb 06Â	Mar 06Â	Apr 06Â	May 06Â	Jun 06Â	Jul 06
Total Industry	$2,148	$2,334	$2,419	$2,135	$2,175	$2,574	$2,708
Entry SUV	1,618	1,904	2,059	1,877	1,870	2,270	2,235
Full-size SUV	5,562	4,807	4,367	3,538	3,023	3,725	4,683
Mid-size SUV	3,314	3,658	3,722	3,447	3,787	4,173	4,255
Compact Pickup	1,526	1,656	1,889	1,789	1,880	valign=”middle”>1,999	2,157
Light Duty Full-size Pickup	3,643	3,871	3,958	3,751	3,902	4,512	4,987
Heavy Duty Full-size Pickup	2,466	3,013	3,131	2,812	3,075	4,041	4,951
Total Full-size Pickup	3,350	3,648	3,732	3,497	3,672	4,381	4,977

 

Source: Power Information Network