I often talk on the air about why timing is important when buying or leasing a new car. I hear from people all the time who say they are going to buy a new car “right after the first of the year”. That is a big mistake and will cost you money. For as long as I can remember, the December incentives are the absolute best of the year. There are a lot of reasons for this, and I will outline them for you.
The main reason is the automakers all push hard in December to hit their sales and market share goals. Most set money aside to be able to enhance the consumer incentives in December. This includes factory rebates, low interest rates, increased leasing incentives, and factory to dealer cash. It is important to note that incentives never cost the dealer, they pass incentives right on to you the buyer.
No matter which automaker you want to buy from, they all push for December numbers. Some of this is due to big bonuses paid out, and it starts at the top. There are always goals the executives need to hit, and the pressure filters from the top of the ranks to the bottom.
The dealers also push extremely hard in December. It might be to outsell their nearest competitor, or it can something as simple as finishing in their region as #1, or maybe just moving up from where they finished last year. Make no mistake, dealers are competitive by nature and they do not like being beat.
When I was still in the car business, my dealership went all out in December to keep our status as the #1 Ford dealership in Texas, and the #1 seller of Ford trucks in the United States I told my people not to pass any business, even if it meant losing money. Every dealer has a goal they want to hit, even dealers who don’t sell big volume. Generally, they use their particular goal to rally their people and tie bonuses to hitting their goal.
Everyone in the industry also knows that many businesses buy in December to enable them to take accelerated depreciation through tax code 179, which I wrote about last week.
We also know that automakers lower incentives in January, to try to cut their costs for the new year. The “bean counters” step in and want to lower the cost of selling a car, and raise their profit per car. After all, if sales fall flat, they have the entire year to make it up. Simply put, incentive spending is low at the beginning of the year, and they come to a crescendo in December. This is why December is always the best month of the year to purchase.
For those wanting to lease a luxury car, payments magically fall for all the luxury brands. You won’t see Lexus, Mercedes, Audi, Infiniti, Cadillac, Lincoln, and the others tell you what they have done in dollar amounts, but they always lower payments. I have seen payments fall as much as $100 per month on some of the highline cars and SUVS in December.
If you are thinking of buying after the first of the year, think again. It will cost you money.