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    by: Kevin Ransom | AOL Autos
     

    Whether shopping for a new washer, a new home or a new car, everyone is always looking for the best deal, right? And why not? The capitalistic system is built on a free market where businesses compete with each other to offer the best product for the lowest -- or at least fairest -- price.

    And in no other realm is the search for the best deal more coveted than in the new car dealership. Indeed, for some folks, haggling, and getting, a lower price when they buy new cars not only means more dollars in their pocket, but it can also be a badge of honor. Something about "getting a deal" -- and even better, "not being snookered" -- has always been a source of considerable bragging rights, whether at the Rotary Club, the water cooler or the corner bar.

    Various theories abound on the best time to buy new cars. Some have touted the holiday season, the beginning of the week or a rainy day as among the best times to try and reel in that low low price. But one sure time that consumers can usually land a bargain when they buy new cars is at the end of the month.

    That's because the sales staff at most car dealerships generally operate on a quota system, where they receive an incremental bonus (otherwise known as a spiff) each time they hit their next sales "mark" for that month. So, if a car dealer is coming up on the end of the month and he's a few cars short of that next spiff, he or she usually has an incentive to get the sales manager to knock down the price of a car in order to hit that quota.

    "Actually, car salesmen receive bonuses from both the dealership and the manufacturer for meeting certain sales goals," says Michael Royce, a one-time high-volume car dealer in Southern California, who is now a consumer advocate dedicated to educating car buyers. To that end, he wrote the book 'Beat The Car Salesman' and runs the Web Site, beatthecarsalesman.com.

    "These goals can and do change as the dealership's and manufacturer's needs change," says Royce. "Sometimes salesmen may receive a bonus for meeting a certain sales goal for the month. For example, if they sell 10 cars in a month, they might receive a $1,000 bonus. Or they may receive a bonus for achieving a "first" -- like a $100 bonus for selling the first car on a Saturday morning. Bonuses make selling cars more fun for the salesmen and most importantly, it supplements their income."

    How To Take Advantage

    Bonuses have become more and more important to the car dealers over the past few years. You can use this to your advantage when you buy new cars.

    "This is because car buyers are becoming more and more savvy due to the volumes of valuable free car-buying information on the Internet," says Royce. "And because buyers are now more savvy, they are becoming better negotiators -- and therefore, paying less for their new cars. That means that the car salesmen are earning less, because they work on commission. So, the dealerships and manufacturers began pumping up the bonuses in order to keep their salesmen. Bonuses are now an integral part of the car salesmen's income."

    Beyond the car salesman's fatter wallet, there's another incentive to cut a deal near the end of the month. The car dealerships themselves also have monthly quotas to hit. "If they meet or exceed their targets, the manufacturer may allocate more vehicles to that dealership," notes Royce. "That gives that dealership a larger inventory and more vehicle choices for their customers. If they don't meet their goals, the manufacturer may cut back on that dealership's incoming inventory until the excess inventory is sold."

    This means that the sales managers are also more prone to shave a little off the price if the end of the month is looming and those goals have not been met. A car dealer at a Honda dealership in San Francisco, who wanted to remain anonymous, concurred. This is good information to know when you buy new cars.

    "Yeah, if the end of month is approaching, and the sales manager or general manager sees that the dealership might be in danger of not hitting its sales quotes for that month -- if it looks like they won't sell enough units to make the manufacturer happy -- they will definitely get more aggressive on the pricing," said the car dealer. "If it looks like they're not going to sell enough units that month, they'll definitely do what they have to do to push extra units out the door as the 30th of the month gets closer. They definitely want to make more money -- to pay the rent, pay for the cars, etc. So they'll definitely be more willing to cut you a deal."

    In fact, Royce adds, "Due to the current economy and slow car sales, some manufacturers are offering huge rebates and other incentives so large that you can actually buy a vehicle well BELOW the invoice price (the dealer's cost). If you can afford it, [right now is] a great time to buy a new car."

    So the question becomes -- how much can you expect to save if you buy new cars at the end of the month?

    That depends on the car dealership, the brand and the size of the market. Each car dealership has a specific minimum profit that they are willing to accept on each car, Royce points out.

    "And that's usually in the neighborhood of several hundred to a thousand dollars over their cost -- their invoice price," Royce explains. "However, if a dealership is struggling to meet its monthly sales quotas, then it's not unusual for some dealerships to sell their new cars at very little profit -- or even no profit. They do this knowing that it helps them reach their sales quota -- and that they'll make it up by earning big profits from their service department."

    One way to find out your dealership's "magic number" is to take note of their inventory when you buy new cars.

    "If you see several vehicles of the same model you want to buy sitting there on their lot, then you can reasonably assume that the dealership needs to move them out ASAP," advises Royce. "If the car you want to buy is harder to find, then they may not be willing to go low on the price. Ultimately, it's all determined by supply and demand."

    Royce also offers this tip: The largest car dealership in your area will most likely have the biggest inventory and therefore, they have the biggest incentive to move their cars out at a discount.

    While the end of the month strategy is generally true, there is something else to keep in mind. Car dealers earn a higher commission on cars sold at higher prices -- which means that, if prices are being cut at the end of the month, their commissions will be lower. It all amounts to something of a balancing act, and the amount of your end of the month discount may depend on how it all shakes out for the individual salesperson when you buy new cars.

    Another caveat to consider: At the end of the month, the car dealerships' vehicle inventories are down -- at least, they are if the dealer is doing a good job of moving his or her product.

    So this might mean you won't get exactly the trim level or option package you're looking for. That is, you might have to settle for a black paint job instead of the silver coat you wanted. Or you might have to forego the posh amenities that come standard on a higher trim level and accept the more basic features of a lower-line edition. But that can be a small trade-off if you are one of the many car buyers out there for whom money is definitely an object when you buy a new car.

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    Discuss
    1 - 20 of 27 Comments
    Ekah92 Mar 02, 2011 7:47 PM
    My Kia is the best car i have had in the past 50 years
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    miksap Jul 05, 2010 1:05 AM
    I BOUGHT A 97 GEO TRACKER NEW AN STILL RUNNING FINE. LIKED IT SO MUCH I BOUGHT A 98 SUZUKI JLX, SAME BRAND, AS THE GEO IS A SUZUKI DRESSED UP BY GM. THE GEO IS 13 YEARS OLD AND THE SUZ IS 12. BOTH ARE RUNNING FINE AND HAVE SPENT $0 IN REPAIRS OUITSIDE OF NORMAL MAINTENANACE IN EACH. EVEN HAVE THE ORIGINAL TIRES STILL IN EXCELLENT CONDITION ACCORDING TO THE TIRE SECTION AT SEARS.
    Report This
    jaspicak Jun 28, 2010 5:56 PM
    I traded in my van for Cash for clunkers to get a Kia. It was the worst deal I ever made. The dealership took me to the cleaners. They also said they would install a bike rack on my car at no charge, but to this day I'm still waiting. This car is now 7 mounts old.
    Report This
    jbsarnoff May 04, 2010 3:28 PM
    My lease on my 2006 Range Rover Sport is about to expire in June. I have about 23,000 miles on it and am considering purchasing it rather than looking for a new SUV. Any thoughts on purchasing the lease?
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    jimbo1350 Apr 03, 2010 10:21 AM
    I find discounts more tied to the laws of supply and demand rather than to specific days of the month. An old timer saleman once told me after I had shopped mutiple dealers for weeks- What is YOUR time worth? It made sense- And I'll always remember his words.
    Report This
    arvig Dec 27, 2009 9:07 PM
    You know, I think I'm going to stop posting on the AOL Auto blog sites, period. All I see for the most part are either 1) Spammers selling goods and services that only an IDIOT would ever want and/or 2) Car salesmen posting lies and claiming the article is inaccurate when it isn't. (Yet said car salesmen NEVER say whom they work for, I guess they never are willing to put up or shut up). Useless to post comments here under such tripe I say.
    Report This
    arvig Dec 27, 2009 6:43 PM
    kenhp1 posts this: "..That way they may have the kinks worked out with the new technology. Also, the prices of technology may be more inexpensive.." My reply: I'm not completly knocking your advice, but I will say this: no matter what, there will be something around the corner with new technology. If you do wait 8 or 10 more years, you might find that instead of working out the kinks with something, they have already stopped using one item of technology and switched to another. Or that some other new feature will be offered in a year or two using...new technology. Now if you do have life in your current car then of course it can make sense to keep running it for now. I guess all I'm saying is don't use "waiting for new technology to iron itself out" or using "waiting for new technology to come out" as an excuse, you'll find yourself just waiting forever now. Any piece of new technology is "obsolete" as soon as you take it home, ask anyone who builds their own computers for instance.
    Report This
    arvig Dec 27, 2009 6:37 PM
    to bkavs24: Let me guess, you work for a car dealership. :P Well, I'm going to say this: Tell us what car dealership so YOU can prove that the buying tips articles here are wrong. Put up or shut up. Until then every suggestion they have posted on the AOL Auto blogs has been pretty close to ones I'd suggest also. In fact, to ALL car salesmen posting on the AOL Auto blogs. When you claim their advice is wrong, put up or shut up. Post the name of your dealership and the city you're located so we as the consumers can see if they are wrong or not. Think, if you manage to prove them wrong of all the business you'll get. I bet none of them will post the dealership they work for though.
    Report This
    rhop0410 Nov 26, 2009 9:04 AM
    Buy online and avoid the dealership except to take delivery of your car. Going thru the front door of a car dealer is a 3-5k mistake. Buy online, get other dealers to compete against each other and avoid the time and pain of dealing direct in person. Buying out of town to get the best deal is way to go if your local dealer won't deal and some will even get you there. End of the month first of the month doesn't come into pay as much now as in the past due to the economy. If your a qualified buyer and smart enough to arrange your own loan and hit them online you will get the best deal bar none.
    Report This
    bkavs24 Nov 26, 2009 1:26 AM
    consumers will believe anything the press tells them.
    Report This
    mjvillao Sep 10, 2009 10:57 PM
    kenhp1 Good job..........buy another Volvo and put another American out of work!
    Report This
    mjvillao Sep 10, 2009 10:54 PM
    fordf350va people like you are destroying American Economy!
    Report This
    mjvillao Sep 10, 2009 10:53 PM
    denotchka time to wake up .....my son!
    Report This
    mjvillao Sep 10, 2009 10:52 PM
    catplo8 you are in luck!......You have DRIVE TIME!
    Report This
    mjvillao Sep 10, 2009 10:49 PM
    Americans need advice to buy cars !.....since when ? GM has a new incentive .....buy a new car and if you are not 100% happy you can bring it back! What GM people are thinking? They should give better warranties like Kia 10 years or 100.000 miles and I bet people will buy American cars! That"s the only way to beat the Japs at this game!
    Report This
    jay1406 Aug 25, 2009 1:51 PM
    From having worked at a Dodge, Chrysler, Jeep dealership I agree with much of what you said. Because of the state of the economy and the decrease in units sold each month, dealership General Managers (etc) are more likely to propose extra bonuses, on top of the already existing ones. For example, the GM at my dealership would announce to the salesmen that whoever had the LAST DEAL of the night would receive an extra $500. This can be an advantage to consumers because salesman & new/used car managers are more likely to cut down on the price just to increase units sold. It is also smart to look at buying a used vehicle that is in good shape. I often hear the salesmen commenting on how they only need 1 more car sold etc. and they will even come in on their 1 day off just to sell a unit to recieve their bonus. Although they might be a little pushy, consumers should negotiate with the knowledge that the dealership may be a more leniant.
    Report This
    fordf350va Aug 23, 2009 7:34 PM
    Why purchase a vehicle now. My wife and I have a single vehicle, a 2005 Nissan Xterra. It only has 80k miles on it. As far as I am concerned it is still new. It runs well, gets 23 mpg highway, and is perfectly reliable. A brand new car? Never. To do so is a waste of money. I am 60 years old, and have never done anything so foolish and expensive. The closest thing to brand new is something like a "program" car (as the Xterra was). They come with a new vehicle warranty, and cost about 30% less. I have two uncles who taught me how to purchase vehices. One of them owned a couple of dealerships. He always drove the best trade-ins that came in. The other had certain standards to purchase a vehicle from a used car lot. That process has never failed me. Any vehicle I purchased lasted at least 3-4 years. I essentially wore them completely out before going to the next one. Do not be fooled. Norman Prevatte Stafford, VA
    Report This
    jcasi11as Aug 23, 2009 6:25 PM
    come down to where i work at and see if you get discount.............
    Report This
    surfmetal Aug 23, 2009 5:13 PM
    Kenhp1 What the hell are you talking about.......A 3 year old car obsolete(no longer useful) what a joke. Cars have been changing since they have been building them, drive your car till 2019 and maybe then George Jetson can drive you to work
    Report This
    daytonangel1 Aug 23, 2009 3:39 PM
    if i ever do buy another car it certainly wouldnt be a general motors product they dont take responsibility for anything
    Report This
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    When you're looking to buy new cars, know that timing is a factor. Find out why car dealers will often discount new cars at the end of the month.
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