When to Buy a New Car

They say timing is everything – and when it comes to buying a new car, they're right

Buy your next new car right at the end of the month, because car dealers have aggressive sales targets imposed upon them by their parent car companies. The pressure to sell is immense – and it ramps right up at the end of every month. That's when you need to be in the dealership, with your finance ready.

Most new car dealerships are, overwhelmingly, privately owned businesses. What they own is a franchise to sell the particular car brand. So, car companies sell their cars to their dealers. And the dealer sells to you. Car companies pay significant bonuses to the dealers who meet their sales quotas.

The competition - between brands and dealerships selling the same brand - is intense. And that’s why dealership sales targets are so aggressive.

Dealers who make, or exceed, their sales targets get handsomely rewarded – in the form of generous bonuses from the car company. These bonuses are not publicly disclosed, but they’re a big, fat carrot dangling in front of the dealer’s face at the end of every month. The carrot is balanced out by a stick, for the non-performers: they get zip.

Dealerships report their sales performance monthly – and those that succeed get rewarded. In the car dealership game, and in the car industry generally, the end of the month is a really big deal.

What this means is that a dealer who happens to be just short of his target near the end of the month will be highly motivated to make those extra few sales. He needs that sale more than he needs to make a profit out of it, from you. Highly motivated dealers are happy to take a bath on your deal simply because there’s a tsunami of car company bonuses just around the corner if he makes your sale. And that will be more than adequate compensation for any loss he might make dealing with you.

Dealers don’t hang a sign up on the showroom floor that says “desperate” near the end of the month. But it’s pretty easy to identify a desperate dealer.

All you need to do is ask the driveaway price and make a really low counter-offer – read: 20 per cent less - and walk away if he declines. Tell him you’re going to go to the next-closest dealership, which is something a desperate dealer really doesn’t want you to do. If he lets you go, he’s just not that motivated. Those big bonuses are on track this month. If he doesn’t want to let you go – there’s your leverage. Stick to your guns – and don’t budge on the low offer you just made. See what happens.

If those big bonuses hang on your sale, a desperate dealer will not let you walk out the door. Especially not on the afternoon of the 29th.