Car dealerships and manufacturers ramp up their advertising efforts as the year draws to a close, flooding the market with dazzling images of shiny new vehicles and enticing money-saving offers. The surge in marketing leaves many shoppers wondering if December is the best time to snag a great deal on a new car.
While conventional wisdom has long held that year-end sales offer unbeatable discounts, the reality is more nuanced. Many factors influence car pricing throughout the year, and savvy shoppers should examine when they’re most likely to find the best deals.
Year-end rush: Fact or fiction?
Some experts tout December as the prime time for car buying, with dealerships eager to clear out inventory and meet annual sales targets. While this idea has some truth, the actual difference in sales volume is modest.
Credit: SPECIAL
Credit: SPECIAL
According to Cox Automotive data, December transactions comprised about 9% of annual new vehicle sales in 2022 and 2023. If sales occurred evenly throughout the year, the monthly average would be 8.3%. From 2016 to 2018, dealers saw 10% of their new car business during the last month of the year.
The December advantage
Still, December holds some distinct advantages for car buyers. Here’s how.
Inventory clearance: Dealers are often motivated to sell remaining current-year models to make room for new inventory, so they may negotiate and offer discounts on current inventory to move it quickly.
Sales targets: Salespeople and dealerships often have year-end quotas and bonuses tied to their performance. As they strive to meet those sales goals, they may be more willing to lower prices and make deals that benefit the buyer.
Rebates and incentives: As the year draws to a close, many automakers and dealers offer significant incentives and rebates to lure potential buyers and boost sales.
Incentive insight: Seasonal promotions and incentives can be cashback, low- or zero-interest financing or special lease deals.
These end-of-year advantages may not be as significant as they once were. With better inventory management and year-round sales strategies, the difference between December deals and those available at other times has narrowed.
Tight inventory due to COVID-19-related supply shortages caused an incentive drought that bottomed out in the fall of 2022. Since then, buyer bonuses have been rebounding.
According to Cox Automotive data, new vehicle incentives in October reached 7.7% of the average transaction price, currently around $48,500. The average transaction price, or ATP, is the average price consumers have paid for a vehicle. Eight automakers had average incentive packages greater than 10% of ATP in October, the latest month for which data are available.
Incentives to compete
Incentives have increased more than 60% versus a year ago as automakers compete for sales. Analysts at Cox Automotive expect many manufacturers will maintain or even increase their seasonal incentives to attract buyers as they make their final push for 2024 sales.
Incentives are highest in crowded and competitive vehicle segments. Three vehicle styles — full-size pickup trucks, midsize SUVs and compact SUVs — routinely account for about 45% of vehicle sales in the U.S. In October, full-size pickup incentives averaged 8.7% of ATP, while the average incentive packages for compact SUVs were 8%. In the compact SUV segment, where 25 models vie for sales, incentives averaged 9.4% of ATP.
Other prime buying periods
While December can offer good deals, shoppers can consider other beneficial times throughout the year.
End of month/quarter: In addition to year-end goals, dealerships often have monthly and quarterly sales targets. Shopping during the last week of any month, particularly at the end of a quarter (March, June, September), can yield competitive offers, as dealerships and their salespeople aim for their monthly sales goals.
Model changeover: New model-year vehicles typically arrive in late summer and early fall. When that happens, dealerships are eager to clear out the previous year’s inventory. Their effort to make room for the latest vehicles often leads to significant discounts on outgoing models.
Holiday sales events: Major holidays, like Thanksgiving, Christmas and New Year’s Day, often feature special promotions and incentives. Dealers advertise enticing discounts during these periods to attract buyers.
Inventory, interest rates and specific brands
Many factors influence the car-buying landscape. As this year winds down, here are a few considerations for car shoppers.
High inventory levels: Many dealerships face inventory levels that have not been seen since the pandemic. A hearty supply in December could lead to more aggressive pricing with attractive incentives as dealers aim to move vehicles off their lots and keep inventory of current model year vehicles down.
Interest rates: The Federal Reserve cut its benchmark interest rate in September and again in November after keeping it high for much of 2023 and 2024 to keep inflation in check. With interest rates high, fewer shoppers could afford to borrow money to buy cars. The Fed’s rate cuts don’t instantly translate to savings for consumers. Still, they trickle down to reductions in auto loan interest rates, leading to more attractive financing offers from automakers. Now, dealers offer more 0% deals on overstocked vehicles from the current model year than we’ve seen in years.
Specific manufacturers: Some automakers struggle with declining sales and oversupply, which may trigger larger buyer incentives. For example, Stellantis reported a 27% drop in Q3 2024 U.S. net revenue, which could lead to more aggressive year-end promotions. The company owns familiar brands, including Chrysler, Dodge, Jeep, Fiat and Alfa Romeo.
Getting the best deal
Regardless of when you choose to buy, consider these tips to maximize your savings:
- Know the fair market value of the vehicle you’re interested in before negotiating. You can find a car’s Fair Market Range and Fair Purchase Price on Kelley Blue Book. While there, you can also browse listings, review Best Cars lists, compare models, read expert reviews and research current deals and incentives.
- Be flexible. Consider multiple models or trim levels to increase your chances of finding a good deal.
- Shop around and get quotes from several dealerships to leverage competition.
- Watch for outgoing models that are being redesigned or discontinued, which often come with deeper discounts.
- Keep used cars as an option: As new car prices drop, used cars may often follow suit, potentially offering great value. Watch for higher interest rates and determine if buying new vs. used is cheaper.
- Look at certified pre-owned vehicles. These cars are often just a few years old, offer low mileage and have been thoroughly inspected and refurbished by the manufacturer. They also come with warranties similar to, sometimes better than, new cars but at a significantly lower price.
Timing and preparation
Being a well-prepared and informed buyer is essential. Here’s what to keep in mind:
- Year-end deals can be great, but you can find compelling offers at other times of the year.
- Stay informed about market conditions, manufacturer incentives and local dealership promotions.
- Be ready to act when you find a good deal, regardless of the calendar date.
- Ensure you’re financially prepared and have done thorough research on vehicles that meet your needs. If you’re not paying cash, shop for a loan before shopping.
The best time to shop for a car is when you don’t need an immediate replacement. Having timing flexibility with your purchase can help you save money. This flexibility supports your patience through car-buying and lets you feel confident about your decision.
Chris Hardesty is a veteran news researcher and editor who provides advice on buying, owning and selling cars for Kelley Blue Book and Autotrader.
The Steering Column is a weekly consumer auto column from Cox Automotive. Cox Automotive and The Atlanta Journal-Constitution are owned by parent company, Atlanta-based Cox Enterprises.
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