December is traditionally the busiest shopping month of the year, and most retailers offer sales and incentives to get people who are out shopping for Christmas to enter their stores and buy their products. This is especially true of car dealerships, which pull out all the stops in the last month of the year to sell vehicles and unwind their existing inventory. This means that December is traditionally the best time of year to get a great deal on a car, truck, minivan, or SUV. In fact, TrueCar.com estimates that car prices in the U.S. are between 8% and 10% lower in December than any other month of the year, making the holiday season an attractive time to splash out on a big purchase such as a new vehicle. Here are 10 reasons why it is a good idea to buy a car in December.
10. It’s Bonus Time
It’s no secret that the sales staff at car dealerships work largely on commission. The more cars they sell in a given month, the more money they earn. However, most car dealerships also provide their sales staff with added incentive in the form of bonuses based on how many cars they sell for the year. Some dealers also provide year-end bonuses specifically for sales staff who move inventory off the lot in December and help the company meet its annual targets. What does all this mean for you, the car buyer? It means that the sales staff at a car dealership will be extra motivated to sell you a car in the month of December. And, they will likely agree to more favorable terms just to get you to agree to buy a vehicle so that they can count it towards their sales total for the year and increase their personal bonus.
9. The Clock is Ticking
During the month of December, the clock is ticking towards midnight on New Year’s Eve, which is when the new sales year starts and the old one ends at most car dealerships. Targets are reset, sales for the year are tallied, inventory is counted and performance appraisals of sales staff are conducted. Basically, this means that everyone at a car dealership is trying to sell as many cars as possible before the clock strikes midnight on December 31. This is the reason that many consumer websites lists December 31 as the very best day of the year to get a great deal on a vehicle you want to buy. The second best day of the year for a car deal is Black Friday. But nothing tops New Year’s Eve, since that is when sales staff at car dealerships are most desperate and eager to unload as many vehicles as possible from their lot before head office closes the books on the year and assesses the dealerships success – and failure – in terms of sales.
8. Competition From Other Retailers
During most of the year, car dealerships are competing with other car dealers in terms of deals and incentives. But during the Christmas shopping season, car dealerships are competing with every other retailer out there in terms of deals, sales, and your hard earned dollar. The Ford dealership is not just competing with the Volkswagen dealership for your business in December, it’s also competing with Best Buy that has a great deal on electronics and wants you to buy a 5- inch HD television set and Home Depot that just marked down snow blowers leading up to December 25th. One of the main reasons that car dealerships offer the lowest prices of the year in December is because they are facing competition from everywhere during the month as people scramble to get deals on Christmas presents for friends, family and themselves.
7. Less Foot Traffic
This one comes down to consumer psychology. Car sales, like home sales, are highest in late spring and early summer. This is because the nice weather brings people outside and makes them eager to shop. In winter, car sales drop because the weather is bad and it makes it more difficult for people to get out of their house and to the car dealerships. People tend to hibernate in the winter months. This means there is less foot traffic in a car dealership in the winter, and that puts more pressure on sales staff to close more sales with fewer potential customers. That puts you, the buyer, in the driver’s seat and gives you leverage in terms of the price you are willing to pay and the extra features you want in a car you’re considering purchasing. Remember, you are in control.
6. Excess Inventory
New model cars arrive in October each year and take their place at car dealerships alongside the previous year’s models. Right now at car dealerships, 2017 model cars are sitting next to 2016 models. This results in a glut of inventory, and in the last three months of the calendar year, sales staff are under pressure to not only sell the new model vehicles they have on their lot, but also clear out the inventory they have of last year’s models. As October and November progress, the prices on last year’s model vehicles steadily drop and the incentives on them steadily rise as the sales force works to unload the excess inventory. By January, the goal is to have more new model cars in the dealerships inventory than cars from the previous year. This means that by December, the sales staff is in a state of near panic trying to sell the inventory they have of car models from the previous year. By December 15 this year, you will be able to get a great deal on a 2016 model vehicle simply as the car dealers try to make room for the 2017 editions.
5. Bragging Rights
Automotive manufacturers, and their dealers, like to have bragging rights over their competitors in terms of their sales figures. By this we mean they love to brag about having the best-selling car, truck or sport utility vehicle of 2016, or in Boise, Idaho, or in America, or in all of North America for that matter. Whatever automotive companies can use to advertise and sell their vehicles, they will grab hold of it. But it all comes down to sales figures. And that means that car dealers will offer deals in December to reach impressive sales figures and earn bragging rights for the year ahead. Of course, you can help the car companies reach their magic sales numbers and achieve bragging rights – for the right price. Be ruthless in December when negotiating the sales price of a car. You get the great deal. Let the car dealer have their bragging rights.
4. Future Inventory
Another incentive car dealers have to clear their lots by New Year’s is the fact that how many vehicles they sell each year determines what types of makes and models, as well as how much inventory, they’ll receive in the coming year from their franchise manufacturer. Dealers that sell lots of vehicles get the most new models, as well as the best-selling models, and lots more inventory. This makes the job of the sales staff easier and helps to drive sales and profits higher at the dealership. It becomes a positive cycle for the car dealers. On the flip side of that coin, car dealers that do not move their inventory in the current year can receive fewer cars in the coming year, as well more used cars than new ones, and models and brands that are not as sought after by buyers.
3. January and February are Dead Sales Months
After Christmas, most people are broke. Any money they had was spent on Christmas gifts or Boxing Day sales. Add this to the frozen winter climate in many places, and it means that January and February are the deadest months of the year in terms of car sales. The staff at car dealerships know that December is the last month they have to really capitalize on consumer spending until the spring rolls around. This means they try to pump up their December deals in hopes that it can carry them through the coming lean months of January and February when almost nobody is out car shopping. Instead, people are at home watching Netflix and paying off their credit cards. Keep this in mind when haggling with a car dealer over the price you are willing to pay for a car you buy in December.
2. Discontinued Models
While car dealers are desperate to get rid of their surplus inventory in December and end the year strong, they are absolutely rabid to get rid of discontinued vehicles – that is, models that the manufacturer is no longer making. As soon as it is announced that a particular nameplate is being discontinued, car dealers will immediately push this vehicle to the front of their lot and slap a reduced price on the windshield. They do this because the market for discontinued cars dries up very fast. Once a car is discontinued the service contracts and parts to support the vehicle are also gone, meaning fewer incentives for buyers to purchase that particular brand of vehicle. Plus, many consumers assume something is wrong with a certain vehicle if it is discontinued, making interest in the vehicle plummet further. In December, the best deals are often found on discontinued cars, trucks and SUVs.
1. Inventory Tax
And the number one reason you are likely to get a deal when buying a vehicle in December is because of what’s known as “inventory tax.” What is inventory tax, you ask? It’s a tax that car dealers in most U.S. states have to pay on all unsold vehicle inventory come January 1. This can be a considerable amount, and difficult to pay, particularly for small car dealerships. And, the only real way to avoid paying this state tax is to sell as many cars as possible before midnight on December 31. This is the overdrive incentive for car sales men and women. Their bosses at the dealership put considerable pressure on them to sell as many vehicles as possible so that the dealership can avoid paying the dreaded inventory tax, and this makes the sales staff even more desperate to cut you a deal and move a car off their lot. Take full advantage of this desperation, people. It’s the best thing you’ve got going for you as a consumer.