All the information on and off the net say’s that buying at the end of the month is the best time to buy that new vehicle that you’ve had your eye one. And for the most part, that’s true. But if you’re like most people, you want the best possible deal and don’t want to buy that dream vehicle and then find out that you could have gotten it cheaper.
That’s why you’re reading this right? Or that’s why you’ve been on several web sites looking for the best way to get the best possible deal. And they’ve all told you that buying at the end of the month is the best time to buy.
That’s when all the dealers are looking to hit their quotas. Lets look at the exception to the rule of buying at the end of the month and if you can tap into this type of information (and none of the information that you’ve researched so far talks about this) you have to potential to save an extra $1,000 to 3,000 dollars off of the best possible deal you thought you could get.
Several manufactures participate in what’s called retroactive or stair step special incentive money. In fact on Edmunds.com they classify this information as clearly dealer only access. You can get the invoice amounts and you can get the rebate amounts from several web sites but you can’t get the information on any of the retro or stair step programs the manufactures participate in.
So what is it and how does it work and more importantly how can you benefit from this incentive and why would this make the end of the month not the best time to buy? First let’s look at a couple of examples of what the incentive is and how it works: Lets’ say that you are looking at purchasing a vehicle and the manufacture has a current stair step program in place.
The program could have different percentage amounts but this is the long and the short of how the program works: The manufacture sets a goal for the dealer to sell “X” number of units. If the dealer hits that number, the manufacture will give the dealer “X” number of dollars for hitting that number.
The incentive in real numbers would look like this: Sell 100 units and get $700 per unit sold. Sell 70% (of 100 units of 70 units) and get $ 200 per unit sold. Sell 80% and get $400 per unit sold. Sell 115% (of 100 or 115 units) and get $900 per unit sold. If the dealer will receive from the manufacture the amount of money in direct proportion to the number of units sold and delivered for the month.
In the example above, if the store sold and delivered 100 units they’d get a check from the manufacture for $70,000! What that really means is that the cost of the vehicle to the dealer was $700 less per unit. So if you did a good job on researching your dream vehicle and found the invoice amount you’d be $700 off on what the true and actual cost is on that particular vehicle. But the bigger picture is this:
Let’s say it’s the last day of the month and the dealer is five units away from hitting their 100th unit. If they don’t sell another unit for the month they’ve already hit their 80% level which would mean that they are going to receive $38,000 (95 units times $400 per unit) from the manufacture. However, they have $32,000 sitting on the table if they sell another five units.
So how aggressive could they be to sell five more units for the month and get that extra $32,000. If you strolled in and knew in advance where they were for the month and what was on the line how much better of a deal do you think you could get? If triple net dead cost on a vehicle was $15,000 and you made an offer of $10,000 do you think you could get the deal?
If it meant losing $5,000 to make $32,000 I think you know the answer to that. So let’s go back to the beginning of all this and answer the question of why the last day of the month isn’t always the best time to buy. Using the above stair step example, let’s say it’s the 25th of the month and the dealer just sold and delivered number 115!
First of all, the dealership just made a whole lot of money just from the incentive. But more importantly, what incentive does the dealer have to sell cars for the rest of the month? Not as much as they did before they hit their number. In fact, what they can do at this point is hold back all their remaining sales for the month and report them for the following month to give them a head start for that month’s incentive.
Sandbagging is a way to jump start the next month but what it ultimately does for the current month is that instead of going real deep on a deal, they are more apt to try and get as much money as possible.
So if the last day of the month rolls around and you come into this store that hit their number back on the 25th you won’t get much of a deal. There just isn’t the same motivation to make a great deal. So the “Bottom Line” is this……Knowing what manufactures are participating in this type of incentive program can have a huge effect on the type of deal you can get. And having a way of knowing where they stand for the month as far as hitting their number will save you a ton of money.
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