[Editor’s note: This article has been updated with new information and for comprehensiveness since its original post December 11, 2017.]
December is the time to snag a bargain on a new car and it’s been that way for years. It is easy to get caught up in the hype and incentives and not end up getting a good deal. This year, people seem incredibly surprised at the deals dealers are offering up right now, mainly due to big customer incentives.
As a reminder, you can take all or part of the rebates in CASH if you need readily available cash for Christmas bills etc. Although the dealers push for the December 31st deadline for their books, the automakers push on through January 2, 2018, to show all sales as 2017. The current round of incentives runs through January 2nd.
Timing Is Critical
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.
The Push Is On
No matter which automaker you want to buy from, they all push for December numbers. Some of this is due to big bonuses that are 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 be 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 beaten.
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 it wants 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.
A Couple Of Examples
In total sales through November, Ford has been the #1 selling brand in America all year, and for a lot of years before this. However, Toyota is breathing down Ford’s neck and is willing to put enough in rebates to try to win the battle and bragging right.
Similar scenario with Toyota Camry and Honda Civic. Camry has been the #1 selling car in America for 14 years and Toyota will throw a lot of money at keeping that title. Moreover, Honda is piling money to try to unseat Camry.
There are a lot of other examples as we head toward the end of the year, but those two stand out!
Everyone in the industry also knows that many businesses buy in December to enable them to take accelerated depreciation through Tax Code 179
. Many CPAs recommend self-employed people buy in December. Also, 2017 is the last year that buyers in Texas can write off the sales tax on car purchases. This is only allowed in seven states, those who do not live in states with an income tax. You must file an itemized return, but otherwise, it is allowable to write off the sales tax paid on any new or used vehicle.
Buying After “The First Of The Year”
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 it comes to a crescendo in December. This is why December is always the best month of the year to purchase.
Luxury Car Leases
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.
Many consumers wait until December and have for years because they know it is the best time due to huge factory incentives. The selection is the best of the year as well. Dealers order heavily at the beginning of the fourth quarter so they’ll have plenty of inventory when the big incentives come in December. If you are going to do anything in the next 4-5 months, pull the trigger now.
Photo Credit: ArchMan