Should I buy an end-of-summer new car?

Should I buy an end-of-summer new car?

Advertised discounts are tempting, but not always the right move

Last updated: September 10, 2015 07:00 AM

Following annual tradition, automotive advertising spools up to a turbo-like frenzy in late summer as dealerships seek to move the current metal and make room for the new—in this case, 2015—models. Large rebates and near-zero-percent finance rates can sure tempt shoppers, but such deals might not always be a smart move.

By definition, these discounted cars are in the last days of their model year. Buy one, and it will be considered a year old soon as the 2016 models hit the showroom. Sure, the rebates and added urgency to negotiate can mean real savings below the window sticker price, but the deal may not turn out be as great as it initially looks.

Our car price analysts have studied the latest offers, finding that the national discounts on Consumer Reports’ recommended models—those that meet our high standard for test performance, safety, and reliability—are about on par with most months. While there can be a reason to buy a close-out model, such as personal preference for that generation or concern about reliability with a redesign, cost savings alone don’t always add up. You need to do your homework before taking the plunge. If you do, there are some real savings available.

Scanning the whole market, TrueCar finds that August has the lowest average transaction price of the year. Historically, the fall tends to have the highest prices—when the shiny, new cars are just arriving and obligatory price hikes have been applied to carry-over models. Come February, the average price is within $400 of August. In other words, if past trends remain true, don’t succumb to outside forces promoting the latest deals. Emphasize other factors in choosing your car and the timing for the purchase. If you can align the stars and get a terrific deal, bravo. Just go into this process informed.

Generally, the model-year-end deals make sense only if you hold on to a car for a long time or if you are a high-mileage driver looking to change vehicles every 3-5 years. For those road warriors who rack up more than typical annual miles, a close-out car would give you one more year to spread those miles out, thereby preserving some trade-in value.  

The exceptions may be those models where there is excess local supply, enabling deep discounts, such as some full-sized trucks and a few SUVs right now. And as we’re seeing this year, there may be 2016 models with a late introduction that can complicate buying strategies, as often a shopper has a finite window to purchase a new vehicle. They key here is to understand when the next model year car will be introduced and adjust your timing and negotiation tactics accordingly.

Driving a bargain

Getting a great deal starts with identifying the best car for you, and then getting it for a fair price. The Consumer Reports car model pages contain a wealth of information to empower you to make a smart choice, and they provide detailed pricing that factors all the customer rebates and the hidden direct-to-dealer incentives. Take it a step further, and our Build & Buy program can help you configure a car online and see local quotes from approved dealerships.

When shopping, be sure not to focus on strictly the advertised deals. There may be even more room for negotiation, as the dealerships are likely to be anxious to sell and the automaker may even have hidden spiffs to pad the dealerships’ bottom line, giving the sales managers a little more flexibility.

Review our car-buying tips before sitting down to negotiate.

Consumer Reports Build & Buy

When buying a car, in addition to research and reviews, Consumer Reports offers subscribers access to the Build & Buy Car Buying Service at no additional cost. Through this service, a nationwide network of about 10,000 participating dealers provide upfront pricing information, as well as a certificate to receive guaranteed savings off MSRP (in most states). The pricing information and guaranteed savings includes eligible incentives. Consumer Reports subscribers have saved an average of $2,919 off MSRP with the Build & Buy Car Buying Service.

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