Prices on new cars tend to be at their lowest in December. The average discount off the sticker price has peaked in December every year but one since 2012, according to data from Autotrader. In December of 2018, the average discount was 6.7%, up from 6.3% the month before. By January 2019, the discount dropped back to 6.3%.
With an average car price of $36,718, that means a December car buyer may have saved about $2,500 off the manufacturer suggested retail price (MSRP), or sticker price.
Deals vary widely by make and model, and the older 2019s offer far greater potential savings than the 2020s. The 2019 versions of the Hyundai Sonata and the Ford F-150 are discounted by averages of about 14% and 16%, respectively, according to car comparison site Edmunds. That shakes out to roughly $8,200 off the sticker price for the 2019 model of Ford's flagship pickup truck, almost double the savings on the 2020 model.
"In general, the end of the year is a good time to buy a car, especially a new car, because dealers want to get the 2020 model cars on their lots and out front," says Brian Moody, executive editor of Autotrader. Add in cold weather and less foot traffic on lots as people focus on holiday celebrations and shopping for gifts, and dealerships are often eager to cut deals, he says.
Here's what to do to maximize those end-of-year savings.
The main reason dealers discount a car is because they want to clear the lot to make way for newer vehicles. As 2019 comes to a close, more buyers are going to want 2020 models and dealers need to make room for them.
"If you can find a 2019 [Toyota Camry], our data shows an average discount of 9%, or $2,721 off MSRP. There are deals on the 2020s as well, though you'd pay roughly $1,000 more for the newer models," says Ronald Montoya, senior consumer advice editor at Edmunds. "There have been some minor changes to the 2020, like adding Apple CarPlay, so it's up to the consumer to determine if those features are worth the added cost."
You can save even more if you're willing to be flexible with the make and model you want.
Cars with more customization options also tend to have greater price flexibility, and as a result, discounts can be steeper, Montoya says. For example, the Toyota Yaris — which has few customization options and only a $300 difference in price between levels — typically has discounts of just 2.2%, according to Edmunds. Meanwhile, the Toyota Camry, with its 12 trim levels (including three hybrids and two V6 versions), has a $10,000 difference between the cheapest and priciest sticker prices, and typical discounting of about 9%.
It also helps to be flexible on brand. For example, Montoya says buyers looking at the Camry should also consider the Hyundai Sonata, which has a longer warranty and an average discount of 14%, or $3,533 off the sticker price.
"The earlier you shop, the more selection you're gonna have, but obviously, the prices won't be as good," says Montoya. If you wait until the final days of the year, there won't be a lot of options left to pick from, but the cars that are still there will be quite a bit cheaper.
"So keep an eye on inventory within the dealerships that you're looking at in your area," he says. "And see if you feel like you're running out of cars, and especially in the ones you want, then you may want to pull the trigger on that vehicle much earlier."
Even though the deals will be better toward the end of the month, attempting to do the entire car-buying process in one day can be overwhelming. "Start to do your search earlier on in the month," says Montoya. "Then close the deal towards the end of the month."
Spreading out the process lets you avoid the crowds and do more of your negotiating on the phone in advance.
By the end of the year, the remaining cars from the outgoing model year may not have the best features or be available in the best colors, but those cars will have the best discounts, according to Tim Fleming, an analyst with Kelley Blue Book. The model year-end push coincides with end-of-month and end-of-year quotas, which push dealers to cut prices further and can give you more negotiating power.
"Any time there's sales targets or quotas to be hit, either for some dealer incentives — you hit X number of units, you get Y dollars on every unit sold — that's why you tend to see better deals at the end of the month," says Fleming. "We see this every month of the year, and then it's amplified in December because you have the year-end sales targets."
If you play your cards right, you can drive your shiny new car to your New Year's party, secure in the knowledge that you saved a lot of money by not waiting until January.
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