Just for the moment imagine you are a contented car dealer enjoying the last days of summer in August. Your general manager is up at the cottage and you’re running a skeleton sales crew because – well, because your inventory of 2011 models is pretty well under control and no one, or at least almost no one, buys a new car in the Dog Days of August.
And then on the horizon you see a tractor trailer laden with new 2012s. It’s not alone, either. There are three more right behind it. These are the 2012s you ordered in May, before you even knew the final pricing for 2012 (though in this sales climate it’s axiomatic that if there is a price increase, it won’t be much).
“Consider the psychology of the dealer,” says industry veteran Paul Timoteo, president of the pricing service www.carcostcanada.com. “The 2012s arrive in late August and it’s scramble time. The dealer principal calls his general manager at the cottage and says, ‘We gotta sell these (leftover 2011) cars. Let’s move these things.’ ”
All of a sudden you, the dealer, are scrambling to make space for those truckloads of new 2012s.
“This is the dynamic where the panic hits,” laughs Timoteo. “What you see is all these 2011s that are being flogged by dealers.”
In other words, the lazy days of August can become anxious days and nights as dealers set about clearing out inventory. Sure, in this day and age, dealers generally do a good job of matching inventory to consumer demand, but in August there just isn’t much consumer demand, and that represents a buying opportunity for the savvy car shopper.
The Dog Days of August are a superb time to go car shopping, at least for those who can pull themselves away from the golf course, the cottage, the hammock and the barbeque.
“But don’t be just sucked in by the deal,” cautions Timoteo. “A great deal on a car you’re not happy with is not really a great deal at all. Don’t rush just to get the good deal; get the deal on the car you want.”
There is certainly no shortage of bargains out there, though. As DesRosiers Automotive Consultants points out, light-vehicle sales in Canada were down by 4.9 per cent last month and they are up only 1.5 per cent on the year.
To keep the sales action percolating, car companies in Canada, working with their dealers, continue to tuck attractive offers into the glovebox, under the hood and in the trunk – from cash-back incentives to cheap leases to extra equipment offered at no cost or with a rebate and even rebates for loyal owners and Costco members.
Make no mistake, as a general rule, it’s a buyer’s market out there. As DesRosiers notes, for most of this year car makers and their dealers have put “massive incentive money” into the marketplace, yet even at that overall sales are about flat compared to 2010.
Dennis DesRosiers, president, says the strong Canadian dollar suggests that manufacturers have an exchange rate bonus that can be used as incentive money to keep the market lively and attractive for buyers.
As a general rule, companies and dealers who are suffering from slow or slower sales counter with healthier sales sweeteners, although this is not always the case. That said, at least be aware that, as DesRosiers says in a note to clients, Audi, BMW, Hyundai, Kia and Volkswagen all had a great July, with sales up in the double-digit range.
Meanwhile, “Honda and Toyota, still racked with supply problems, had under-performing months down in the double-digit range,” he says.
