If you're in the market for a new car, this fall could be a particularly good time to buy. Not only can you capitalize on dealers' model-year-end clearances, but you could also drive off the lot before tariff-related price hikes take effect.
Here's what you need to know.
"The end of the quarter typically features favorable pricing as dealers try to clear inventory and hit quotas," says Odysseas Papadimitriou, CEO of rate comparison site WalletHub. For dealers, the primary method for clearing out older models to make room is to offer up steep discounts to customers, sometimes with no-interest financing.
Right now you may get an even better deal than you could usually get at this point of the year. "It's an interesting time for the industry," says Jeremy Acevedo, senior manager of insights at Edmunds. "The sell-down of existing 2019 and 2018 models has been slower than in years past."
Though Acevedo says that any discounts or savings will ultimately depend on the specific make and model a consumer is looking to purchase, and the situation at the dealership, slowing sales during 2018 and 2019 have made this fall a particularly good time to shop.
That may mean that dealerships are in a tighter spot than in previous years and more willing to make a deal with you to move a vehicle off of the lot. And that could potentially lead to big savings.
The trade war is already affecting car buyers. As a result of previously enacted tariffs on aluminum and steel, consumers are already paying more for new cars, which has added an additional $240 to the cost of production.
The Trump administration is still dangling the threat of imposing automotive tariffs on imports, a plan that was delayed for six months back in May. Those prospective tariffs could reach as high as 25% on vehicles from manufacturers in Europe and Japan, and could go into effect in November. That could raise prices on models built by Honda, Toyota, Volkswagen, and more.
If these tariffs are implemented, Acevedo says, consumers are likely to see prices go up instantly. Other experts agree. "It's gonna push up the price of cars. Consumers will pay more. That's going to affect buyers across the spectrum," says Robert E. Scott, a senior economist at the Economic Policy Institute.
Those tariffs could also be levied on foreign-sourced auto parts and components, leading to higher prices for vehicles that are domestically produced, too. Consumers could expect to see the price of new vehicles go up between $455 to $6,875, depending on details of the tariffs and variables like where vehicles are manufactured and where their parts and components are sourced, according to an analysis from the Center for Automotive Research.
Cars already on the lot wouldn't be affected, as they have already been imported and are ready for sale, according to Acevedo. That makes for additional pressure on dealers, who may want to sell vehicles before consumers are scared off by headlines warning of higher prices. Again, that might work in your favor.
If you do plan on hitting a local dealership, here are some key ways that you can focus your car search to save money:
Buy preowned. Used or preowned vehicles will likely get you the most bang for your buck because of how rapidly new cars depreciate — a new car can lose thousands of dollars in value within just one year. A certified preowned car can cost thousands of dollars less than a new one. Car buyers could have saved an average of $14,443 buying a three-year-old used model over its new counterpart, according to Edmunds.
Negotiate. Dealers are looking to make a sale, and that gives you leverage. Acevedo says that many dealerships are offering attractive incentives, including low or zero-interest financing options, as well as rebates. If you settle on a final sticker price, Acevedo recommends negotiating for a rebate or a better financing option to land an even better deal.
Steer clear of luxury brands. The market is chock-full of premium vehicles, but you'd have to be "insane" to buy a new high-end vehicle, South Dakota-based financial advisor Rick Kahler previously told Grow. That's because they're much more expensive to insure, repair, and some even require specialized fuel.
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