Hammer Time: The Best Time

“When should I buy?” Some folks think that the end of the month is the best. Dealers need to hit their quotas and well.. isn’t every car salesman measured on their month end performance? Others believe that the best time to buy is when the new model’s change over during the August/September time frame. The manufacturers need to clear out those leftovers 2011 models for their recently pressed ‘new cars’. Most of the new cars are mostly the same so… why not just buy the old ones! Well, it’s not that simple.The answer to ‘when’ to buy always depends on three ‘whats’.

The Popular Car: Let’s say you want to buy a Hyundai Elantra. One of my personal favorites for a frugal long-term ‘keeper’ car. Let’s say the MSRP for your Elantra is about $20,000. Can you get a deal right now? Well let’s consider Hyundai’s…

Incentives? None.. to minimal if you are in the military ($500) .

Rebates? Not a chance.

Why? Seven days of inventory. In a business where the average is 48 days. Hyundai has no incentive to discount this car. They may throw a small bone towards ‘special’ financing or leasing the car. But the ‘special’ people eligible for that ultra-low rate will likely be for those chosen few ‘super-prime’ customers. No debt. Never late. A credit history as straight as the lines on an old Volvo 240. Even those buyers will likely pay right near MSRP… plus interest.

If you need the popular car now, go and buy it. But their will be a counter-clockwise flushing sound when you sign on the dotted line. Thousands of extra dollars down the drain for not waiting. Can you live with that? Well, perhaps you may want to consider …

The Other Popular Car: Some cars are popular for a reason. Others are just overproduced. Or right near the end of their model run. Take for instance another one of my other personal favorites, the Nissan Versa.

134 days in inventory. Even with a tight rental fleet relationship and a value-focused base model, Nissan can’t sell these things. Well, not entirely. The Versa still leads the subcompact segment. It’s just that Nissan is trying to satisfy it’s capacity levels and is using whatever means it can to make it so.

Consumer incentives for the Versa? Here is a quick synopsis of March… and here is a quick synopsis for April. They look pretty similar. In Nissan’s case I’m suspecting that their financing criterion is getting pretty loose compared with industry standards. Why?

As a guy who used to lqiuidate cars for Capital One Auto Finance, I can tell you that when a manufacturer is willing to take on five years of risk at no interest, they are willing to move their metal. The dealer is also going to be receiving special rewards for achieving certain sales goals during that time. That along with high inventory levels translates into an opportunity to make the right deal for the consumer.

Another good recent example is when GM decided to deep six the Chevy Cobalt with the Chevy Cruze. Six months ago you could get an XFE model for just a bit over $10,000 plus tax, tag, and dealer bogus fees. That was because GM tossed $4,000 on the hood of every Cobalt that left the building. Not including bonuses, quotas, or whatever financial brew was wafting from their Americredit subsidiary. GM wanted the Cobalt gone and they used everything within their power to make it so. The same now goes for the Versa except…

The Black Swan: The recent tragedies in Japan have completely wiped out most of the consumer’s chance for leverage. Once every few years or so there is an event that either tilts the game heavily towards the consumer or the dealer. Tariffs, bankruptcies, natural and man-made disasters. It can be Mitsubishi offering 0 down and 0 payments until several months after signing to anyone with a pulse. Or a clunker program that rewards the gluttons of America with free moolah for their next car.

In short the best time to buy was… a couple of years ago. The worst time to buy is…. more than likely the next several months. Every manufacturer will be jacking up prices to ‘captialize’ on the lack of supply. My advice is to buy used.. or to simply invest in the ride you have instead of the corporate greedfest that is to come.

But in the ‘normal’ times: Forget about the ‘end of month’ myth. Dealers play their percentages and there are so many folks that now go and buy during this time that it’s no longer a contrarian strategy. Timing car purchases is like timing stocks. Unless the owner of the dealership is your father’s cousin’s former roomate, you can forget about timing your purchase that way.

The opportunity for the deal can be broken down to three elements. Rebates. Incentives. Days in inventory. The last one usually encourages factory incentives to the dealer which makes the deal even sweeter for everyone involved. That Silverado you yearned for in 2007 now has over 90 days of inventory and some healthy rebates as well. It may be a good time to pull the trigger… on a leftover 2010. Just don’t expect anything from Japan to follow suit between now and the next few months. Or better yet… consider the ‘used’ market which I will highlight in the next write-up.