Conventional car-buying wisdom suggests that the best time to shop for a new vehicle is at the end of the year, when dealerships are more willing to offer discounts to meet year-end sales targets. However, while there are plenty of reasons to shop for a car in December, none have anything to do with year-end sales bonuses.
In fact, a study released this summer by Santa Monica-based automotive pricing and information website TrueCar found that the transaction price is highest in December, averaging $31,146, and lowest in August, averaging $29,296.
That doesn't mean cars are more expensive in December. The year-end price increase is largely a result of luxury and SUV sales, says Larry Dominique, executive vice-president of industry solutions for TrueCar.
"You see the discounts go up over the last month of the year, but you tend to see transaction prices rise as the month goes on as well, which seems to be a dichotomy, but in reality it's not," he says. "The last month of the year, people are buying luxury cars, so the percentage discount goes up, but the average transaction price goes up as well."
While discounts are greater in December, many consumers wrongfully believe that these markdowns are issued by dealerships desperate to meet year-end sales targets. Dominique says manufacturers provide such discounts to the dealerships as they work toward improving annual sales figures. As a result, dealerships tend to make higher grosses in December.
But there are instances when dealerships are prepared to give up some of their gross profits as the year ends, says Scott Campbell, general sales manager at Winnipeg's Mid-Town Ford.
"There are deals to be had because some dealers get into trouble with heavy inventory," he says. "If they have the old models sitting in their lot because they didn't move them throughout the year, then that makes it a good time of year to buy, but successful dealers who run their programs all year long keep December the same as normal."
Such discounts would be dealership-specific, Campbell says. However, there is another bargaining chip for Canadian consumers in the winter.
Less foot traffic in winter puts pressure on dealers to close more sales with fewer visitors, says Chase Skakun, sales manager for Calgary Hyundai.
"December is the first month that is very, very slow, and our quotas are still pretty intense, so we have to make sure we're being very aggressive," he says. "I have more traffic in June than in December, and the traffic is easier to sell to in June than it is in December, so I don't have to discount cars as much in that peak time as I do in December."
And, with cold temperatures keeping many customers indoors, winter is peak season for online car shopping.
"Traffic drops dramatically in December, January and February, but December is the worst," Skakun says. "We make sure we can get everything and anything off the Internet, because we know they're not coming in the door."
Skakun reiterates that most dealerships are not as desperate to make sales before the close of the year as many believe, and while there might be opportunities for savings in December, similar opportunities exist year-round.
"We're not going to change the way we sell cars just because of the time of day or the time of year," he says. "I'm not going to go out of my way to take losses on vehicles to put registered numbers on the books."
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