General Motors Co. Chevrolet pickup trucks sit on display for sale at a car dealership in Louisville, Kentucky, U.S., on Wednesday, Jan. 31, 2018. General Motors Co. is scheduled to release earnings figures on February 6.
Luke Sharrett| Bloomberg | Getty Images
Black Friday isn’t just good for deals at the mall.
The day after Thanksgiving is among the most anticipated car shopping days of the year, and analysts at Edmunds predict this year’s sales event will be among the largest in recent history. Cheap financing and a glut of 2019 models that dealers still need to move off the lots mean steep discounts for car buyers.
About 27% of all vehicles sold in October of this year were 2020 models, according to a report by Edmunds, compared with October of 2016, when roughly 37% of all vehicles sold were 2017 models. That slowdown in new car purchases means that dealers are urgently trying to get rid of their 2019 inventory, Edmunds analysts say.
“Black Friday is historically one of the biggest car-shopping events of the year, but this year, the holiday weekend is also hitting right at the end of November, which is creating a perfect storm of savings for new-car shoppers,” Jeremy Acevedo, senior manager of insights at Edmunds, said. “Automakers and dealers are going to be extremely motivated to clear out lingering 2019 model-year vehicles and hit their end-of-month sales goals, so shoppers can expect some great discounts.”
Black Friday comes at a critical time for dealers. The end of every month places demands on salespeople to meet their monthly quotas, and November is particularly crucial in preparation for annual numbers. Not to mention, many car manufacturers have begun to roll out their 2020 lines, putting even more pressure on dealers to move idle steel and make way for the latest models.
2019 models clog lots
“The transition to 2020 is very late this year. There are a lot of 2019s sitting around that should have been gone a long time ago,” Tyson Jominy, vice president of data and analytics at market research firm J.D. Power, said. “For the industry, it’s not so good. From a consumer perspective, it means you’re going to find some really, really great deals out there this weekend.”
In years past, dealerships have been fully transitioned, meaning stocked half with old models and half with next year’s new models, by October, Jominy said. This year, however, inventory might not catch up until as late as January after the busy end-of-year sales events.
“At this point in the year, we shouldn’t even be thinking about the transition. Hopefully this is the end of the ’19s,” he said. “To any consumer, I would say get out there and look for model year ’19s, because that’s where you’re going to find the really good deals. It should be a pretty good weekend for that.”
Best six weeks to buy a car
The country’s largest auto retailer, AutoNation, however, says it’s not feeling the transition woes.
“Our inventory is in perfect shape. The manufacturers might have all kinds of their own problems, but our inventory is good to go,” Marc Cannon, chief marketing officer of AutoNation, said. “We expect a very big holiday sales event. It’s the best six weeks of the year to purchase a car.”
The Chrysler Dodge Jeep Ram Fiat dealership in Manhattan still has 101 new 2019 models on its lot, according to its website. Sales manager Frank Monica says it’s a normal number of older models for this time in the year.
“October sales were a little slow for older models, but there were also no incentives on them yet,” Monica says. The “2019 inventory is winding down now, so the incentives of course are a little bit better.”
The dealership began to roll out sales on some older models two weeks ago, Monica says. By Black Friday, holiday sales will be in full force, he says, offering employee price discounts on select models to everyone who walks in the door.
Cheap financing
On top of cash discounts, many dealerships will advertise low or zero percent interest on financing, but shoppers will need stellar credit to qualify. Even if you don’t qualify, standard rates will see a drop. Car loan rates often follow the Federal Reserve interest rate, which has been cut three times this year. The average loan rate on a new vehicle was 5.7% in October of this year compared with 6.2% the same time last year.
For Prestige, a network of two Volvo dealerships in Englewood and East Hanover, New Jersey, and a Lincoln dealership in Englewood, New Jersey, nearly 80% of deals they sign are leases, President Matthew Haiken said. That means the drop in interest rates enables them to pass along those savings to consumers.
“When the federal rate comes down, that of course helps our bottom line,” Haiken said. “When I got into the business 10 or 15 years ago, you were looking at 6 or 7% rates. Now, we’re talking 3 and sub-3%.”
How to score the best deals
There are a few ways to maximize savings if you plan to pony up for that new car this weekend, according to experts at Edmunds.
The first thing you’ll want to do is plenty of research. Familiarize yourself with the available deals, and consider what kind of vehicle fits your needs. You can likely check your local dealer’s inventory online, and Edmunds recommends having a couple of backups in case your dealer sells out of stock. And if you’d like to take a car out for a test drive, look to do so before the busy weekend.
Also before the big day, you’ll want to get an appraisal for your old vehicle to get a great trade-in price. If you’re looking to lease a car, you should apply for preapproval on a car loan as early as possible.
Be sure to check the time your dealership opens and show up as early as you can. You’ll have a better selection of cars to choose from, and plenty of salespeople to talk you through the offers.
Finally, don’t forget your papers. You’ll need your driver’s license, insurance information and loan paperwork.
