Brad Korner, general manager of AIS Rebate, an Ann Arbor, Michigan, firm that follows the labyrinth of automaker discounts, equates buying a car cheap with purchasing discounted baked goods. To get the good deal, you have to really look. "You go into the store and the day-old bakery stuff is on a different shelf," he says.
Be wary of offers that seem too good to be true, like $69 per month payments. Earl Stewart, a North Palm Beach, Florida, Toyota dealer who is critical of other dealers' sales tactics, advises people to ignore dealer advertising. "Probably 99 percent of it is misleading," he says. The low-price deals often are on stripped-down models that the dealer may not even have. They also can include hefty down payments.
But armed with the right information, you can navigate the new car sales maze and get 20 percent or more off a car's sticker price:
FIRST: PICK A TARGET, FIND SLOW SELLERS
For more than a year, many compact, midsize and large cars, gas-electric hybrids, and many lower-level luxury cars haven't sold well. So dealers have big supplies. Because they're paying interest on the cars, they're eager to sell. So figure out the size of car you want. Then look for automaker monthly sales press releases on the internet and find models with big year-over-year declines. The sales figures are released early in the month. To get the best deal, you can't be too picky about color or equipment because you need to buy what's on dealer lots.
SECOND: LOOK FOR DISCOUNTS ONLINE
Many websites, including those from the auto companies as well as kbb.com, truecar.com and Edmunds.com, list publicly available discounts called incentives. Say you decide on a midsize car. Sales of the Nissan Altima were off nearly 15 percent in January, so incentives are likely. On its website, Nissan was offering $4,550 off a nicely equipped $25,460 Altima Midnight edition. That's nearly 18 percent off the sticker without haggling! There often are combinations of zero percent financing and cash back. according to Wards Automotive, midsize cars with the biggest inventories include the Chevrolet Malibu, Honda Accord, Toyota Camry, Hyundai Sonata and Ford Fusion some of the top-selling cars in the U.S.
THIRD: VISIT DEALERS
During the first two weeks of the month, go to a few dealers. Confirm the incentives you found online then ask for more. Often automakers add deals by region, or they offer rebates if you own a competitor's model or have one of their models. There also are other discounts for being an AAA member, serving in the military or being a recent college graduate. Most sales people, when they find out you've done your homework, will be honest and give you a good price, says Korner. Michelle Krebs, an analyst for Autotrader.com, says at this point, don't mention a trade-in. Work that into the deal later. Don't agree to buy at this time.
FOURTH: PICK A DEALER, GO BACK LATER
You'll get an even better price by waiting until the last few days of a month or quarter. First, dealers offer sales people bonuses to meet monthly sales goals. If they are close to the bonus, they'll be more willing to deal. Also, dealers get what are called "stair step" incentives from automakers for hitting sales goals. It's big money, so dealers close to their targets are more willing to bargain.
For a larger dealer, Stewart says hitting stair step goals can mean $250,000 or more, the difference between a monthly profit and loss. General Motors is helping some dealers get rid of 2016 cars by giving up to 20 percent off the sticker.
Bigger dealers can get higher payments from automakers and sometimes can offer better prices than smaller ones.
The bottom line is if you go through all these steps and you're a tough negotiator, you can get a well-equipped car for less than the price of a stripped-down SUV.
Even if you don't move this month, deals on cars probably will go on for a while. "Until the buying public loses its appetite for SUVs, it's not going to change," says Jeff Rogers, general manager of the Williamson Automotive Group in Miami.
Top 10 cars stuck on dealer lots that are ripe for deals
It's no secret that U.S. consumers prefer SUVs and trucks nowadays, and that means car sales are sliding. That's forcing automakers to offer big discounts to sell them. Car sales fell to just 36 percent of U.S. auto sales last month, a record low for a January. Generally, discounts are bigger on cars with the highest inventory. Here are the top 10 cars with the biggest stockpiles, measured by the number of days the inventory could meet demand at the current sales rate:
Brand Vehicle • Days' supply
Buick Lacrosse • 330
Buick Cascada • 298
Chevrolet Corvette • 267
Volkswagen CC • 259
Chevrolet Camaro • 236
Buick Verano • 234
Mitsubishi Mirage • 231
Acura ILX • 227
Chrysler 200 • 225
Buick Regal • 222