How to score the best car deal in December
Call it a stocking stuffer if you want. After all, a key fob will fit nicely and snugly into a stocking on the mantel.
Just as retailers capitalise on the holiday shopping craze, automakers and dealers have got in on the action with holiday deals of their own. Shopping for a new vehicle in December has become a holiday tradition for many Americans.
"The end of the year has become quite a big sales event," said Matt DeLorenzo, senior managing editor of Kelley Blue Book. "A lot of manufacturers are loading up their best deals for the end of the year."
If you're in the market or giving it consideration, here are key tips to consider.
Look for localised deals
Your local dealer might be offering discounts that automakers aren't advertising nationally. So make sure to head to a car-shopping website to gather information ahead of time.
"Remember to put in your ZIP code because there's a lot of regional money out there that you may be missing out on," DeLorenzo said.
"The beauty of the internet is you can do so much research up front - everything from what's my trade-in worth, what are these cars selling for, what are people paying. It's all about getting your expectations in line."
Don't assume 2018 models are best deals
Shoppers often assume that dealers will heavily discount current-model-year vehicles to get them off the lot by the end of the month, but that's not always the case.
Ivan Drury, analyst at car-shopping-advice website Edmunds, says that dealers will often carry previous model-year vehicles into the following calendar year.
"You can get wrapped up in the hype and hysteria of savings, but we see that the prior model year continues on for months," he said. "These cars are sitting on the lot in January, February, March."
So there might not be a "drastic difference in savings" between the 2018 and 2019 vehicles, he said. If facing a choice, the 2019 vehicle might be a better deal because its resale value will hold up better and its technology might be notably upgraded.
"You could conceivably get a better deal. And you might technically get a better car," Drury said.
If a low price is your priority, consider sedans
Americans have fallen out of love with sedans. In November, only about three in 10 cars sold were passenger cars, according to Morgan Stanley. The rest were SUVs, crossovers, vans, and pickups.
Consequently, the usual price gap between sedans and larger vehicles has widened. For example, the average compact car cost US$20,429 in November, compared with US$28,765 for the average compact SUV, according to Kelley Blue Book.
But you might have to look harder to find a sedan because General Motors, Ford Motor, and Fiat Chrysler have discontinued, or announced plans to discontinue, most of their passenger cars.
Ford, for example, had only 12,000 new Focus cars left as of December 3. When they're gone, they're gone.
"There may be some great deals on cars, but there are fewer of them around," DeLorenzo said.
Large sedans might offer the best deals. According to Kelley Blue Book, December deals include US$10,000 off the 2018 Cadillac XTS Platinum, US$5,750 off the 2018 Chrysler 300, and US$5,500 off the 2018 Ford Taurus.
Take advantage of the compact, midsize SUV craze
The mad rush from cars into crossovers has prompted most automakers to offer compact or midsize SUVs or crossovers. Competitors include the Honda CR-V, Mazda CX-5, Chevrolet Equinox, Nissan Rogue, Toyota RAV4, Volkswagen Tiguan, Subaru Forester, and Ford Escape.
Competitors in the compact and midsize SUV segments, which offer a similar vehicle length as sedans with a higher stance, have flooded the market in recent years.
The furious competition is finally prompting more automakers to discount those models, Drury said.
"You are going to start finding more deals. That's due to saturation," he said. "They're all fighting for that market share."
Buy a used hybrid or plug-in
Resale values on electric vehicles have not held up well, in part because newer versions often have significant improvements.
Want one? This could be your moment. The Nissan Leaf electric car is often available as a used model in the range of US$10,000, said Drury.
In early December, Ford was offering US$11,507 in guaranteed cash on the 2018 Ford Fusion Energi, according to Kelley Blue Book.
Be prepared to pay more
For anyone who hasn't purchased a car in a while, "sticker shock is going to come across the board", Drury said.
New-car prices averaged US$37,654 in November, up 4 per cent from a year earlier, according to Kelley Blue Book. And used-car prices aren't much better.
In fact, with interest rates rising and loans extended for longer periods, the average used-car payment recently hit US$400 monthly for the first time, according to Edmunds.
"If you've been out of the market for just a few years, you will be surprised," Drury said.
Get pre-approved for a loan
This tip applies no matter when you're shopping. Before heading to your local dealer, consider getting pre-approved for a loan at your financial institution.
Then you can use that loan rate as leverage when you visit the dealer, which might be willing to match or beat the rate you have been offered.
"You've got to do your research," Drury said.
Wait until the end
As the new year draws closer, some dealers will get more desperate to sell vehicles to bolster their 2018 revenue and profit figures.
"It really does make sense to go shopping before they close out their calendar year for sales," DeLorenzo said.
But you might have company on the lot. The busiest time of the month for dealers is between Christmas and New Year's, Drury said.