Why Labor Day Is the Best Time to Buy a Car
Featured in the New York Times - Wednesday September 1, 2010, 7:19 pm EDT
If you're considering buying a new car, you may want to consider buying it this weekend.
According to Juan Flores, director of vehicle valuation for Kelley Blue Book, Labor Day is traditionally the best time to buy a car. That is because manufacturers offer generous incentives on current-year models to clear them out and make room on dealer lots for vehicles from the next model year, which traditionally start arriving this month.
"If you just isolated this calendar year, Labor Day is the best time to buy," he said.
So how do this year's Labor Day deals compare with past ones?
While some auto industry experts have said that consumers will find some of the best Labor Day deals ever this holiday weekend thanks to a recovering auto industry, Mr. Flores said he didn't believe deals would be any better over all than last year. The reason, he said, is that manufacturers have worked in recent years to cut back their inventories so there isn't as much excess of 2010 vehicles. Still, this doesn't mean the deals this year won't be generous.
"The assumption is that this year is somehow a special year," Mr. Flores said. "While that's not the case, it's still a great time to purchase a vehicle."
He pointed to "some very competitive programs" this holiday, including nearly 0 percent interest rates with 48- to 60-month financing terms, and $3,000 to $5,000 cash rebates on some vehicles. This compares with typical offers earlier this year of 24- to 36-month financing terms and $500 cash back, he said.
The financing deals are more generous this Labor Day weekend, he said, thanks to today's low interest rate environment, but you could have received more cash back last year. He estimated that the average cash rebate this weekend would be $1,500, down from $2,500 on average last year at the same time. (The exact rebates vary, depending on the type of vehicle.) But according to Kelley Blue Book, cash incentives this Labor Day have increased on a year-over-year basis for some vehicles: midsize cars, full-size cars, full-size crossover utility vehicles, sports cars and vans.
If you choose one of this year's Labor Day deals and buy a 2010 model, you should keep in mind that you are buying a year-old vehicle and are thus taking on that additional depreciation. For that reason, Mr. Flores said, you may only want to buy a 2010 model now if you are planning to keep the vehicle for a long time.
And if you can't make it to the dealership this weekend, Mr. Flores recommended trying to buy a car at the end of a month, in general. That's traditionally when dealers are trying to hit certain volume targets to receive manufacturer incentives, he said. Weekends, he said, are also typically better times to buy than weekdays since dealers have certain sales targets they want to hit on traditionally busy weekends, so they may be more willing to offer deals.
Do you plan to hit a car lot this weekend? Why or why not? What are some of the best Labor Day deals you've heard that will be offered this weekend?