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Christmas bargains for clever car buyers

You may be in a strong position to get a deal on a new set of wheels this Christmas.

It’s fair to say that 2021 has been a poor year for new car sales – although not as bad as the disasters of 2020 – as the car industry struggles to recover from Covid-related shutdowns and supply shortages.

The pandemic has caused problems for both demand and supply throughout the year. Car manufactuers and dealerships have gone from having too many cars and not enough customers at the start of the year to the exact opposite for the last few months.

As we close out the year, car buyers are facing a new car market with long waiting times and far fewer deals than normal, which has then put increased demand onto the used car market and resulted in record high prices for second-hand cars.

Here’s what to keep in mind if you’re going online or heading out to showrooms in the run-up to Christmas.

Car dealers need to hit their targets

Sales staff are paid commissions and have their own targets, and everyone needs to hit their annual targets. Although a lot of their original 2021 targets may have gone out the window due to stock problems, dealers and salespeople will still be keen to shift as many vehicles as possible before December 31.

The automotive retail industry runs on target-based economics, and the Covid-19 pandemic hasn’t changed that. All that’s happened is that the numbers have been revised, with more pressure to succeed in other ways, like profit margin or selling more add-on products.

Dealers earn money or discounts from the manufacturers as a 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 the calendar ticks over to January 1.

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 usually 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 usually apply.

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 impact on your low, low monthly payments…

Christmas car sales are here - time to bag a bargain
“Got a great deal on the car, but all this wrapping paper cost me £500…”

New car Christmas bargains

For manufacturers, new cars are what it’s all about, but the overall problem is that there haven’t been enough cars to sell. That means there won’t be the usual smorgasboard of new car offers available, but there will still be bargains if you’re prepared to be flexible.

The best deals will always apply to models that haven’t been flying out the doors during the year (like diesels) or are due for replacement shortly, as manufacturers and dealers try to clear the decks for 2022 models to start rolling in.

These deals usually revolve around deposit contributions and lower rates on their finance offers, although neither are likely to be as significant as they were last year.

The best deals will always be on vehicles available for delivery before 31 December, rather than forward orders that won’t arrive until January 2022 or later. 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 there’s certainly no such thing as the deal of the century, so if you’re not sure then don’t buy.

Used car Christmas bargains

The used car market has gone crazy in the second half of this year, with prices much higher than anyone expected. This is a direct result of the shortage in new cars, meaning that hundreds of thousands of customers with expiring PCPs ca’t change into another new car so are instead snapping up near-new used cars. That then has a knock-on effect all the way down the line, so that even old bangers are worth more than they were a year ago.

If you’re in the market for a used car, be aware that this is only a temporary situation. You might be paying over the odds for a car today, but that means you’re going to lose even more money when you sell it down the line.

As with new cars, the dealers are looking to shift the stock they have on site before the end of the year, so you have to be ready to do business in order to get the best deals on offer. 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 still save yourself some money on the advertised price, as well as maybe swing a better finance deal than is normally available. But choose you car carefully as you’ll probably be paying more for it in the current market, so if you don’t end up liking it very much, you could lose a lot of money if you want to sell it again in six months’ time…

Pre-registered cars

Stock shortages on new cars has meant that there are fewer pre-registered cars hitting the market in December than we’d normally see. However, there will still be a few around – probably wearing Mitsubishi badges, as the company exited the UK new car market in September and had to clear out any remaining stock.

A pre-registered car is one that is registered to the manufacturer or dealer, rather than to a customer, in order to count it as a ‘sale’ on the official records. Once registered, these cars will sit in a “secure storage facility” (which is usually just a field somewhere…) for at least 90 days, after which time they can be sold as used cars.

This guy understands Christmas shopping
Sales managers will do anything to get your business before the end of the year

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 perennially 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).

There will always be more demand for convertibles in warm weather because people are impulsive buyers, but canny sellers will realise this and make sure they have plenty of stock available to match the demand.

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

The potential savings on the car you are looking at could vary wildly, but automotive retail always comes down to supply and demand. This Christmas is very favourable to dealers rather than buyers, so don’t get sucked into buying a car if you don’t really need to.

Make sure you know what sort of car you want, as specifically as possible. Many people get distracted by a deal that sounds great – and ignore the fact that the deal on offer is for a car that is not remotely suitable for their needs.  Regardless of what the dealer says, be clear in your own mind about what you want.

Have a good read of our ten golden rules for buying a car. These are valid all-year-round but are key when there are potentially confusing offers being thrown at you from dealers.

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. And with prices being higher then normal, that may mean lowering your expectations a bit this time around.

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!

Car on Christmas tree (The Car Expert)

This article was originally published in December 2014 and is updated each year. It has been comprehensively re-written for 2021 to reflect the current market situations for both new and used cars.

Stuart Masson
Stuart Massonhttps://www.thecarexpert.co.uk/
Stuart is the Editorial Director of our suite of sites: The Car Expert, The Van Expert and The Truck Expert. Originally from Australia, Stuart has had a passion for cars and the automotive industry for over thirty years. He spent a decade in automotive retail, and now works tirelessly to help car buyers by providing independent and impartial advice.
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