Memorial Day weekend is shaping up to offer some of the best deals on new cars in years. The discounts vary widely by manufacturer and type of car – don’t expect too much off on a Toyota SUV, for example. But it’s a good time to be in the market for an electric vehicle.
The new car market is finally a buyer’s market again.
For decades, the holiday weekend was a great time to buy a new car, with dealers competing to sell out the last of the previous year’s models to make room for incoming new cars.
It hasn’t been that way for a while, though. Covid lockdowns disrupted parts supply chains for car factories, making new models often hard to find. It got so bad that, for a while, almost all cars were routinely selling for above the manufacturers suggested retail price, or MSRP, something that’s normally rare. Deep discounts? They were practically unheard of.
Not this year. The auto industry is back pumping out new cars, and dealers are discounting again.
Currently Ford dealers are offering average incentives of up to $1,556 on the Ford Bronco, more than six times what they were offering last year, according to data from Cox Automotive. On the GMC Sierra pickup, dealers are offering almost $6,000 on average in incentives, according to Cox.
EVs are good buys right now. The Volkswagen ID.4 and Kia Niro EV, for instance, are selling at average discounts of more than 13%, according to Edmunds.com.
Zero-percent financing deals for buyers with good credit have also become much more common this year than last, according to Edmunds.com.
“A lot more inventory’s out there now,” said Eric Barbosa, business leader for the Cavender Auto Group in San Antonio, Texas. “I mean, we’ve got to get rid of these cars.”
It’s not just seasonal sales hype, industry experts say. Dealers really are negotiating deeper discounts than they have in the last few years because they need the space. Overall, new vehicle inventory at dealers is the highest it’s been since late in 2020, according to Cox Automotive.
The average discount on a 2023 model year vehicle these days is $4,127, according to Edmunds, which is much deeper than discounts on leftover prior-year models for the last few years.
Newer 2024 model year vehicles are selling at an average discount of $1,741.
“There’s a big push to get these ’23s out and make room for the ‘24s and ‘25s,” said Barbosa.
There are more of these prior-year models, meaning 2023 model year vehicles, left than there were this time last year. Vehicles from the outgoing 2023 model year now account for 6.8% of all new vehicles on dealers’ lots, according to Edmunds.com. That’s higher than the percentage of 2022 model year vehicles available around this time last year, and it’s much higher than the 3.7% that were 2021 model year vehicles left for sale this late in 2022.
Where are the biggest deals and risks?
Bulging vehicle inventories are not evenly distributed, though. Dealerships for some manufacturers have many more unsold vehicles than others. Dealers for Stellantis brands – Dodge, Chrysler, Jeep and Ram – are offering the biggest discounts, according to Edmunds.com. These brands are usually sold together in combined dealerships.
Dodge is offering some of the biggest discounts in the industry, averaging more than $6,700 per vehicle, according to Edmunds. Chrysler vehicles are selling for an average discount of more than $6,200, while Jeeps are selling at an average of $6,000 off sticker price. Since these figures are averages, that means that not every model in every place will be discounted that much, of course, while some will be discounted more.
Here’s one big caveat. A model year may seem like just a number, but shoppers should research carefully to make sure that last year’s model isn’t missing features and improvements introduced on the 2024 version. For example, if you’re considering the Lincoln Nautilus SUV, the 2024 model is entirely redesigned with lots of improvements including a big interior screen and customizable “digital scenting” to make the cabin smell nice. Also, when it comes time to trade in, the 2023 could be worth less than a 2024 model.
“Consumers who prefer to swap their vehicles every few years may want to look elsewhere as these new outgoing models experience heavier immediate depreciation compared to new vehicles from the current model year,” said Edmunds industry analyst Ivan Drury in an email.
And not all dealers are offering exciting sales.
“Toyota, Honda and Kia, there is still so much pent-up demand for these brands, inventory is tight, and sell-through rates are high,” said Brian Finkelmeyer, an industry analyst with Cox Automotive.
So you’re unlikely to find big discounts on those vehicles. It will also depend on the type of vehicle you’re looking for, experts say.
“The deals are likely to be had on slower-selling models, specifically sedans and hatchbacks,” said Brian Moody, an industry analyst with Autotrader and Kelley Blue Book. “With compact SUVs selling in higher and higher volumes each year, don’t bother. You will likely be paying full sticker price.”
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