If you do your homework, now is the time to practically steal a new sedan from your car dealer.
For more than a year, sales of cars have been tanking because Americans have gone nuts over SUVs and trucks. As stockpiles of sedans such as the Chevrolet Malibu and Chrysler 200 stretch across car lots, automakers are forced to offer big discounts to move them.
There are a few steps to finding the best bargain, but it boils down to this: Figure out which cars aren't selling, research discounts, and don't buy until the end of the month when dealers are more desperate to sell.
Brad Korner, general manager of AIS Rebate, an Ann Arbor, Mich., firm that follows the labyrinth of automaker discounts, equates buying a car cheap with purchasing discounted baked goods. To get the good deal, you have to really look. “You go into the store and the day-old bakery stuff is on a different shelf,” he says.
Be wary of offers that seem too good to be true, like $69-a-month payments. Earl Stewart, a Toyota dealer in North Palm Beach, Fla., who is critical of other dealers' sales tactics, advises people to ignore dealer advertising. “Probably 99% of it is misleading,” he says. The low-price deals often are on stripped-down models the dealer may not even have. They also can include hefty down payments.
But armed with the right information, you can navigate the new-car sales maze and get 20% or more off a car's sticker price.
Find slow sellers
For more than a year, many compact, midsize and large cars, gas-electric hybrids and many lower-level luxury cars haven't sold well. So dealers have big supplies. Because they're paying interest on the cars, they're eager to sell.
So figure out what size car you want. Then look for automakers’ monthly sales press releases online and find models with big year-over-year declines. The sales figures are released early in the month. To get the best deal, you can't be too picky about color or equipment because you need to buy what's on dealer lots.
Look for discounts online
Many websites, including those from the auto companies as well as kbb.com, truecar.com and Edmunds.com, list publicly available discounts called incentives.
Say you decide on a midsize car. Sales of the Nissan Altima were off nearly 15% in January, so incentives are likely. On its website, Nissan was offering $4,550 off a nicely equipped $25,460 Altima Midnight edition. That's nearly 18% off the sticker without haggling. There often are combinations of 0% financing and cash back.
According to Wards Automotive, midsize cars with the biggest inventories include the Chevrolet Malibu, Honda Accord, Toyota Camry, Hyundai Sonata and Ford Fusion — some of the top-selling cars in the U.S.
During the first two weeks of the month, go to a few dealers. Confirm the incentives you found online — then ask for more.
Often automakers add deals by region, or they offer rebates if you own a competitor's model or have one of their models. There also are other discounts for being an AAA member, serving in the military or being a recent college graduate. Most salespeople, when they find out you've done your homework, will be honest and give you a good price, says Korner.
Don't mention a trade-in at this point, says Michelle Krebs, an analyst for Autotrader.com. Work that into the deal later. Don't agree to buy at this time.
Go back later
You'll get an even better price by waiting until the last few days of a month or quarter. First, dealers offer salespeople bonuses for meeting monthly sales goals. If they are close to the bonus, they'll be more willing to deal. Also, dealers get what are called stair-step incentives from automakers for hitting sales goals. It's big money, so dealers close to their targets are more willing to bargain.
For a larger dealer, Stewart says hitting stair-step goals can mean $250,000 or more, the difference between a monthly profit and loss. General Motors is helping some dealers get rid of 2016 cars by giving up to 20% off the sticker.
Bigger dealers can get higher payments from automakers and sometimes can offer better prices than smaller ones.
The bottom line is if you go through all these steps and you're a tough negotiator, you can get a well-equipped car for less than the price of a stripped-down SUV.
Even if you don't buy this month, deals on cars probably will go on for a while. “Until the buying public loses its appetite for SUVs, it's not going to change,” says Jeff Rogers, general manager of the Williamson Automotive Group in Miami.