This is my annual reminder that most people have no idea when their car’s actual birthday is. Is it on the day the car was built, or is it the day your car was purchased?
So how DO you know when to get your beloved vehicle a birthday card? The truth is, neither of those dates has any relevance to the age of your car other than how it relates to your warranty.
When I talked about this subject on the air last weekend, many people didn’t realize that your vehicle’s birthday and its actual age are different. I will explain the difference but more importantly, how it affects you and your pocketbook.
The big thing to understand is that everybody shares their car’s birthday. This may sound foreign to you, depending on when you bought your car. Seriously, in just a few weeks, every car in America will have a birthday and turn a year older, and it has nothing to do when it was purchased or acquired.
For as long as I have been in the auto industry, mid-August is the model-year changeover. It is true; every single car in America turns a year older all at the same time. As an example, today a 2011 model car is three years old because as of now, it is still considered to be model-year 2014. In mid-August, that 2011 car will suddenly become four years old. Again, when it was bought is not relevant.
As you might suspect, when your car does become a year older, it depreciates and loses value. In a few weeks, auction values will fall, the online values will drop, and dealers will lower prices on the cars on their lots for sale. By the end of September, the used car market will have adjusted itself down to account for every car being a year older.
If you happen to be in the market now for a new car and have a late-model trade-in, it can cost you hundreds or thousands of dollars to wait until the Fall season to buy. I talk to people every year in the summer, and those who shop in July just can’t understand why their vehicle is worth so much less in late August than it was just a month earlier. Unless you have inside information like this, it would be hard to comprehend the big drop in value that occurs virtually overnight.
A lot of people too are used to buying a new vehicle in the Fall season due to larger incentives on new vehicles, but the incentives are really good right now, and the likelihood of them going higher is remote. The exception to this rule might be vehicles that are undergoing major changes for 2015. Ford F150 is a good example. Ford will have to keep the incentives big on the 2014 F150 since the 2015 is radically changing.
Timing is everything when making a major purchase and these factors should be considered when you are thinking about anew vehicle! What gains there may be by waiting for a year-end sale can be more than erased by a sudden drop in your trade value.
Jerry Reynolds, The Car Pro