TIP 8: Consider run-outs & demonstrators
When you’re in the market for a new car, you might want to consider buying a ‘run-out’ model or a demonstrator. The two terms are commonly used, but they mean very different things.
Run Out Models
Run-out sales occur when there’s a fair amount of existing stock in the market, and a new model is either just released or just about to be released. Let’s say you’re Toyota. You’re bringing out a new Camry next month. There are 3000 soon-to-be old Camrys between the end of the production line and the nationwide dealer network. You really need to get rid of them before the new Camry hits the showroom floor across the country, and the unsold ‘old’ Camrys get exponentially harder to sell.
What do you do? You have a ‘run-out model’ sale. It happens all the time – thousands of dollars get lopped off the price, and often a few factory (or dealership) extras get thrown in. This is before you negotiate over the price you’ll pay, for a specific car, at a specific dealership.
See our earlier posts on end of the month, and making sure the car is in stock now.
Remember: just because the car is part of a notional run-out sale, that doesn’t mean you can’t also negotiate the price even further down. Under Australian law, prices cannot be fixed. Dealers (in fact, sellers generally) are absolutely free to sell anything to anyone, at any price that is mutually agreed.
Demonstrators are the new cars that new car dealers use for test drives. You know: someone lobs into a car dealer, they look at the new Mazda3, the salesman identifies them as a likely customer (as opposed to a test-driving time-waster). They offer you a test drive because they know it’s harder for you to say no once you’ve driven the car.
What happens to demonstrators? They need to get sold before they get too many kays on the clock and lose too much value.
You make a substantial potential saving. Get the dealer to make an offer. Ask the equivalent drive-away price on an identical brand new car. Compare the two. Make a much lower counter-offer (at the end of the month). With demonstrators you could potentially drive it away that day if your finances are sorted – a powerful position to be in towards the end of the month with a car dealer.
(You can always say words to the effect of: ‘Well, I really wanted a red one, and a manual [if the demonstrator is a silver auto] but I’ll take it off your hands for [dealer offer minus 15 per cent]’.)
Trying this gambit is simple. Just remember, the dealer is entitled to say ‘no’. But beyond that, what have you got to lose.
Remember not to fall in love with the idea of owning any particular car at any particular new car dealer. If the dealer declines to accept your offer, try another dealer – you can always go back to the first one later if you want.