Automoblog In-Depth: Are The Holidays A Good Time To Buy A Car?
Black Friday marks the start of the holiday shopping season as many stores, businesses, and other outlets advertise their best deals and biggest savings of the year. Many retailers and malls extend their hours and every year, it seems some of the more ambitious shoppers make the news by camping out (literally) at the front of the line. And while holiday shoppers are grabbing Black Friday deals on clothes, games, and electronics, what about a larger purchase, like an automobile? If someone is in the market for a car, does it behoove them to visit a dealership over the holidays?
Pre-Owned Vehicles
A new study by iSeeCars.com, an automotive data and research company, shows Black Friday is one of the best days for scoring a deal on a pre-owned vehicle. The iSeeCars.com team analyzed over 48 million 1- to 5-year-old used car sales from January 2013 through December 2016, comparing holidays and months of the year to determine which times offered the best deals. A “deal” was defined as a savings of at least 5 percent.
“We then ranked the holidays by this percentage, as well as the months, and found that holidays in November and December, and consequently the months of November and December, offer more deals than you would expect to typically find on an average day,” explained Phong Ly, Chief Executive Officer, iSeeCars.com.
The research by iSeeCars.com indicated Veteran’s Day provided the most deals (43.2 percent more than average), followed by Black Friday (37.5 percent) and Christmas Eve (35.6 percent). Ly says dealers are trying to meet their annual goals and end-of-year quotas, especially in November and December. As a result, they are more likely to lower profit margins and offer extra discounts to bolster sales.
“In addition, new cars from the next model year begin selling in or around August,” he said. “As a result, more used cars come onto the market as they’re traded-in as part of new car purchases, and the increased supply of used cars toward the end of the year also helps drive prices down.”
Overall, based on the percentage of deals offered, November is the best month, with pre-owned car shoppers receiving 38.4 percent more deals when compared to an average day. December (38.2 percent more deals) is close behind. By comparison, October comes in at 16.7 percent, January at 19.9 percent, and February at 4.8 percent. May was the worst month, with 28.3 percent fewer deals on average.
“While Memorial Day and the 4th of July have associations with car sales and better deals, that doesn’t seem to hold for used car sales,” Ly said. “We found fewer deals than average on those holidays, and the months from late spring through summer are generally not great for finding used car deals.”
According to data from iSeeCars.com, the Cadillac CTS is one of the best bargains for shoppers seeking a pre-owned luxury vehicle. Pictured here is a 2013 model. Photo: General Motors.
New Vehicles
So pre-owned car shoppers are likely to come away with some savings but what about those eyeing a new model? Do new vehicle buyers receive any extra incentives? The November Dealer DataView index shows dealership websites are seeing an increase in traffic, growing by 3 percent in October versus September. The report notes the increase in web activity may usher in a “relatively robust selling climate” as dealerships prepare for Black Friday and Cyber Monday.
“The DataView index provides a timely snapshot and actionable insights for dealers seeking to better understand consumer sentiment,” said James Grace, Senior Director of Analytics Products, Cox Automotive Media Solutions. “As dealers gear up for the holiday season, the November report points to another period of robust demand and purchase intent from car shoppers.”
Dealertrack data from 2016 revealed a near 40 percent rise in credit applications on Black Friday compared to other Fridays in November. That finding suggests dealerships may prioritize Black Friday accordingly this year. And while Cyber Monday registered only a 2.6 percent growth in credit applications over other Mondays in November last year, it’s still an increase, and perhaps a sign some additional savings may be in the holiday air.
“At the beginning of November, we saw a number of dealers and automakers launch Black Friday and holiday promotional events – the famous red bows came out – as they do every year as a way to close out the year on a high note,” said Michelle Krebs, Executive Analyst, Autotrader.
Generally speaking, as the year comes to an end, the factory rebates and dealer discounts get better. However, the selection may not be as great. Photo: Michael Gaida.
Due Diligence
Krebs believes car shoppers should still exercise a little caution, regardless of what the holiday promotions say. While the big inflatable gorillas and “Black Friday Sales Event” ribbons may resonate with consumers, those might only be there for show. Sometimes, holiday specials advertised on other products are marketing ploys and cars are no exception.
“The deals this time of year are pretty good, but prices specifically on Black Friday are about the same as they are the week before or the week after,” Krebs explained. “Automakers and dealers simply try to ride the wave of the shopping frenzy created by Black Friday.”
“Don’t assume that just because it’s Black Friday that every car from every dealer is discounted,” Ly added.
Shoppers who need a new vehicle but want to maximize their savings should consider a 2017 model. Granted, the vehicle would be a year old at that point, but it will still come with a full factory warranty. Also, depending on a given vehicle’s product development cycle, a 2017 may be little to no different than a 2018. For example, if a vehicle was recently redesigned, a 2017 model is likely to have the same (or very similar) features as a “new” 2018.
“For consumers who want a really good price, shop leftover 2017 models,” Krebs said. “Between now and the end of the year, consumers will find excellent prices and more negotiating room on leftover 2017s as automakers and dealers do whatever it takes to clear out the previous year’s inventory before the start of the new year.”
Advice & Considerations
Shopping for a car isn’t always the easiest thing in the world. If you find yourself needing advice on the buying process or insight on a particular model, please contact us. Our team is well versed and experienced when it comes to this and we are always happy to help. iSeeCars.com provides this handy video on questions you should ask at the dealership. It’s important to not get the cart before the horse. Indeed, it might be the deal of the century, but take it one step at a time.
“Just because there are more deals offered on Black Friday doesn’t mean the general rules of thumb about buying a car don’t apply,” Ly said. “Things like doing online research ahead of time about the cars you’re interested in, figuring out your budget, test-driving the car, and getting the car inspected by an independent mechanic are still important to do.”
Carl Anthony is Managing Editor of Automoblog and resides in Detroit, Michigan.
The complete holiday deals study from iSeeCars.com can be found here.
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