Did you know that new car incentives are 40% higher during one particular time of the year? Or that used car prices are more negotiable now than at any point in 2022? It’s amazing how much money you can save with a bit of knowledge that car dealers don’t want to share. At YAA, we strive to make car buying and ownership easier, less expensive, and simply a better experience. Helping the consumer save money is what drives us. In this guide, we’ll go over the best time of the year for buying a car. If you’re determined to spend less on your next set of wheels, we think you’ll find this information valuable.
The Best Time to Buy a Car Has Changed
As manufacturer incentives plummet, car buyers are looking for other ways to save.
Average new car transaction price (orange) versus average incentive spend as % of transaction price (blue). Source: Cox Automotive
The demand for new and used cars continues to outpace supply as automakers have a really hard time increasing production. Global supply shortages have affected car makers on every continent. However, the situation for car buyers is improving in late 2022. After almost two years of ridiculous prices, deals can finally be negotiated.
The best time of the year to buy a car has changed. Pre-pandemic monthly trends may return someday (if automakers ever get back to normal inventory levels), but let’s talk about where things stand in 2022 and early 2023.
Wait a Few Months For the Best Deal
In late 2022 and early 2023, new and used car prices are dropping. This is not a normal time for car price trends. Price declines are more pronounced in the used car market, but select new models are negotiable too.
Let’s cut to the chase:
The best time to buy a car lies in the months ahead. Deals can be negotiated today, but your leverage for lower prices will increase in December and in early 2023.
The last week of the year is usually the best time to buy a car. Incentives and negotiation leverage improve as dealers hurry to move the last of the previous model year off of their lots.
Let’s talk about the used car market. Wholesale price declines are finally translating to lower used car prices (more on that here). This was confirmed by the November Consumer Price Index (CPI) report that showed used car prices were down -2.4% month-to-month when seasonally adjusted. New car prices remained nearly flat at +0.4%, the smallest new car price increase in 2022.
In 2022 (green), used car prices have fallen after record highs in 2021.
We track used car prices weekly. See this week’s used car price update.
New car prices are softening, despite automakers steadily raising MSRPs. Don’t expect widespread MSRP drops anytime soon. However, there lies hope in the slow return of manufacturer incentives and the demise of additional dealer markups.
Our YAA Auto Experts have noted that domestic brands like GM, Ford, Chrysler most often present the best opportunity to get a deal under MSRP.
In other words, your chances of buying a new car at or below MSRP are better now than at any time in the past 18 months.
The longer you wait (into 2023), the more negotiation power you’ll have as the overall new car market softens.
However, when it comes to total cost, it’s not that simple. Interest rates are rising to the highest levels in over a decade. If you wait longer to buy, there’s a real chance that the cost of financing may rise to the point where your monthly payments end up higher due to interest. Here’s the latest on car loan interest rates.
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The average transaction price (ATP) of new cars has hovered around $48,000 for months. The latest data shows it continues to remain at that level. How could we possibly advocate for negotiating lower prices? The data shows that luxury car shoppers continue to buy, and that has been driving up the overall market average. Deals are out there, if you know where to look.
Average transaction prices for new cars, 2012-2022. Source: Cox Automotive
With market conditions always changing, we believe that knowledge is power. YAA’s Auto Experts are just one of the great benefits of YAA Membership. Learn more about our plans. How much money can you save? Read YAA member success stories!
Historical Norms: When Is the Best Time of the Year to Buy a Car?
Pre-pandemic data from Edmunds shows that the time around Labor Day is when most new car incentives begin, with discounts growing as the year comes to an end. Better deals continue on outgoing model years through fall and winter as new models compete with outgoing model years for space on dealer lots.
Many automakers roll out the new model year by September. If you’re okay with the outgoing model year, you have significantly more leverage to negotiate prices down. Don’t show up to the dealership expecting thousands of dollars off of the brand-new model year unless demand for new cars falls off a cliff (as it did in 2020).
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Year-end car deals most often arrive as manufacturer incentives (which we keep track of every month). New car incentives were at historic lows during the worst of the chip shortage, but they’re slowly coming back as recession fears hit demand.
Here’s how current model-year savings compare with new model-year cars. Remember, these were the historic norms, and the situation in 2022-2023 has changed dramatically.
In pre-pandemic times, this graph shows that new car incentives increased at the end of the year. This is still true, but to a lesser extent as inventory remains lower. Source: Edmunds.com via Market Watch.
Stay On Top of Market Conditions
Would you have guessed that used car prices have fallen nearly 14% at wholesale markets since last summer? Probably not, because it wasn’t until September that car prices dropped at the retail level. The car market is changing as automakers slowly come out of the semiconductor chip shortage, and consumers hold back on spending as recession fears circulate.
Here’s the bottom line: rapidly-changing car market conditions are likely to overshadow the seasonal trends that we’ve seen historically in pre-COVID times.
After 18 months of price increases, used car prices are dropping. Even if sticker prices are nearly the same, at YAA, we’ve had more members scoring deals under the advertised price. That’s why we think you should negotiate 5-10% off of a car purchase today.
On the new car front, negotiation leverage depends on three main factors: 1) vehicle supply, 2) local dealer inventory and 2) demand for the specific model and trim.
See the latest new car inventory numbers here.
For example, our YAA auto experts joke that everyone wants a Toyota RAV4 Prime right now. Demand is through the roof, Toyota is hardly producing any, and therefore prices for the RAV4 Prime remain insanely high.
On the other hand, some new car models have more inventory than at any time in the past year. New car inventory isn’t on par with pre-pandemic levels, but it’s an improvement. Pair that with reduced demand, and new cars are finally becoming more negotiable. Dealer markups do exist for popular models, but you CAN negotiate pricing on new cars again.
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