As Christmas looms large and another year draws to a close, car dealers start looking at their sales numbers – and many of them will be getting quite nervous. That could be good news for you, if you’re looking for a new or used car and hoping to pick up an end-of-year bargain.
Franchise dealerships are set sales targets by their manufacturers, and the dealers earn money or discounts from the manufacturers as reward for hitting or exceeding those targets. This can be worth tens of thousands of pounds to a dealership, so it is in their interests to make sure they sell (and deliver) as many cars as possible before 31 December. And of course, sales staff are paid commissions and have their own targets, and everyone wants (and needs) to hit their annual targets. So there are a lot of people who would really, really like you to buy a new or used car this Christmas.
The automotive retail industry runs on target-based economics. A manufacturer based in Germany or Japan will set annual sales targets for its UK subsidiary, who will then set targets for individual dealers. The dealers all set targets for each member of the sales team, which will be based on volume (number of cars sold) and profit margin (how well they negotiate a deal with you).
For everyone in the chain, failing to hit sales targets has serious financial consequences, so they are all ‘incentivised’ to hit those targets, usually by throwing money at customers in one way or another. So if you are that customer, you can take advantage of some great Christmas deals – although it won’t necessarily be on every car, and you will absolutely have to take delivery with full payment by the end of December. If it’s not registered by 31 December, it doesn’t count, so the offers won’t apply.
Although the British new car market has continued growing in 2016 – despite repeated warnings about the impact of Brexit – and the used car sector is cracking along at record pace, car dealers usually find that their targets are getting ever-higher to cope with the increased theoretical demand in the marketplace. With huge pressure on dealers to shift metal in the last couple of weeks of the year, salesmen’s bullshit levels will be going through the roof and Business Managers everywhere will be rehearsing their speeches about how GAP insurance can be included with hardly any effect at all on your low, low monthly payments…
New car Christmas bargains
For manufacturers, new cars are where it’s all about. The biggest savings and best finance deals this Christmas will be on new cars. This particularly applies to models that haven’t been flying out the doors during the year or are due for replacement shortly, as manufacturers and dealers try to clear the decks for 2017’s cars to start rolling in. These deals usually revolve around deposit contributions and lower rates on their finance offers.
The best deals will always be on vehicles available for delivery before 31 December, rather than forward orders that won’t arrive until January 2017. The Car Expert advises that you should know what car you want and then try to get a great deal on it, rather than rushing into a purchase because you are worried about missing out on the deal of the century. There’s no value in getting a big discount on entirely the wrong car, and anyway there’s no such thing as the deal of the century, so if you’re not sure then don’t buy.
Used car Christmas bargains
Car manufacturers are obviously more interested in selling you a new car than a used car, as they exist to build and sell new cars. You might be very excited about buying a three-year-old car, but the manufacturer is not quite as thrilled. Obviously it’s important that cars flow through the marketplace, so that the seller of that three-year-old car can buy a new one, so there is still a fair amount of financial encouragement on used car around Christmas time, but the deals are usually not as spectacular as they can be on new cars.
As with new cars, the dealers are looking to shift the stock they have on site, so you have to be ready to go before the end of the month. That means money all paid and/or finance all signed up and activated so that you are driving out in your car before 31 December. If you have all your ducks lined up and are ready to buy, then you can save yourself some money on the advertised price, as well as maybe swing a better finance deal than is normally available.
Out of season bargains
For years, conventional wisdom has said that the best time to buy a convertible is in winter, because demand is low since it’s freezing cold and raining/snowing/sleeting all the time. The reverse is supposedly true for 4WDs and SUVs, as demand is highest in winter when the roads are muddy and drivers get snowed in.
These ideas are still true to a certain extent, but nowhere near as much as they used to be. Modern convertibles are perfectly comfortable with the roof up in winter, with few of the problems like leaking and terrible insulation that soft tops of yore used to have. Similarly, 4WDs are perenially popular with families all year round, and have been ever since SUVs made the jump from utility vehicle to aspirational middle-class must-have (and are often no better than a hatchback at dealing with off-road conditions). So you may be able to snap a better deal on a convertible over Christmas but not by a massive amount. Likewise, the world is not going to run out of 4x4s over winter, despite what that desperate-looking salesman keeps suggesting.
How to save money on buying a car this Christmas
Used car valuation experts CAP Automotive have suggested that an average family car buyer could save around £500 on a car over Christmas, and they have put together the cute infographic below to show all the wonderful things you could do with the money you save. The potential savings on the car you are looking at could vary wildly, but at the end of the day it always comes down to supply and demand. And if you are in the market to buy a car, you are in a strong position to get a deal this Christmas.
Make sure you know what sort of car you want, as specifically as possible. Many people get distracted by a great-sounding deal and ignore the fact that the deal on offer is for a car that is not suitable for your needs. Regardless of what the dealer says, be clear in your own mind about what you want.
Do your research online and make sure you understand what you are committing to. Have a read of our fantastic car finance glossary to be absolutely clear about all the jargon involved with that amazing offer the salesman was telling you about. While you’re at it, have a read of our checklist of what to organise before you apply for car finance.
Finally, and most importantly, know your financial limits. Whether you are paying cash or financing the vehicle, don’t be tempted to blow your budget just because it sounds like a good deal. Our forums and comments sections are full of customers who have rushed into buying a car, and subsequently changed their minds. Be a clever car buyer and you could save a bundle; if you are not so clever, it could cost you a lot more later on than you could ever save up front. Merry Christmas, and happy car shopping!
This article was originally published in December 2014, and has been refreshed with updated information for Christmas 2016.