It’s no secret that 2020 has been pretty disastrous for new car sales, as the coronavirus pandemic threw the financial balance of millions of families into uncertainty. Car dealerships in England are closed again right now and will re-open for the second time this year in the next week, for what may be a busy month of pre-Christmas sales.
The pandemic has caused problems for both demand and supply. Most car manufacturers struggling with production at various points this year and trade auction houses were also forced to close in compliance with lockdown restrictions, which meant that there were fewer new and used cars available during the summer months once dealers re-opened. On the other hand, customers have been reluctant to splash out on a new car due to economic uncertainty, with many turning to the used car market instead.
There’s no doubt that a lot of business within the automotive sector have had it tough this year, and most of them will want to at least finish on a strong note once dealerships across England re-open next week. Which means there wil be plenty of bargains on offer if you have money available and you’re planning to change your car before the end of the year.
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 2020 targets went out the window long ago, they’ll have new ones for the last flurry of sales before 2020 is finally brought to a close. And with new car sales tanking this year, it will have cost everyone a lot of commission money. That means 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, and the coronavirus 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 31 December.
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…
New car Christmas bargains
For manufacturers, new cars are what it’s all about. The biggest savings and best finance deals this Christmas will be on new cars. With 2020 new car registrations on track to be the lowest in years, and price rises likely to arrive after the Brexit transition period ends shortly, the next few weeks could be a great time to buy a new car – if you’re going to be in the market for a new car, rather than trying to change out of your finance agreement early, which is almost always more expensive.
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 2021 models to start rolling in.
These deals usually revolve around deposit contributions and lower rates on their finance offers, although this year there is likely to be a high-than-normal level of discounting on the sticker prices as well.
The best deals will always be on vehicles available for delivery before 31 December, rather than forward orders that won’t arrive until January 2021 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 actually done pretty well over the last six months. There has been a degree of people abandoning public transport in favour of private cars, which has particularly benefited the market for relatively cheap used cars, while there has also been a shift in buying habits from new cars to used, as people who have traditionally bought new cars on finance are switching to near-new used cars in order to save some money on their monthly payments.
This has created some stock shortages on certain models, and has generally seen used car pricing higher than expected across the board as demand increases and supply decreases. That means that there probably won’t be the same level of discounting and dealing going on as there will be for new cars, but there’ll still be deals to be had. At the end of the day, there are still about a million used cars for sale around the country, so it’s still a buyer’s market.
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 save yourself some money on the advertised price, as well as maybe swing a better finance deal than is normally available.
Another slow year of new car sales means that we also expect to see a large number of pre-registered cars hitting the market in December. However, working against that will be expected price rises on many models, meaning this might be less prevalent than last year.
Registration data for the last few months has been pretty unusual compared to previous years, but it does look like some car manufacturers have been registering thousands of new cars despite having no buyers for them. Once registered, these cars will sit in a “secure storage facility” (usually some fields somewhere…) for at least 90 days, after which time they can be sold as used cars.
Many manufacturers and dealers had a tough September (which is one of the two big new car registration months each year), particularly with fleet sales still way down on previous years, so it’s likely that a number of cars would have been pre-registered to help them meet their aforementioned targets. Those cars would then be due to hit the used car market in December.
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 really will be a buyer’s market, so you are in a strong position to get a great deal before the end of the year.
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.
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.
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 was most recently updated with updated information for Christmas 2020.