Following annual tradition, automotive advertising spools up to a turbolike 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 2015 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 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.
Looking at the whole market, TrueCar finds that August has the lowest average transaction price of the year. Looking back, 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. So, for a mere $400, you can theoretically drive a new car for six months. So, these summer deals aren’t looking so good now.
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.