Timing is everything if you want to save money on your next vehicle

Personal finance contributor Christopher Liew breaks down the key factors that affect car prices, and highlights some of the best times to shop for a vehicle. (Getty Images / Shaunl)

Are you looking for a new set of wheels?

Buying a car is a major financial decision, and timing your purchase correctly can save you hundreds or even thousands of dollars. Whether you’re in the market for a new or used vehicle, dealerships offer different discounts and incentives throughout the year, depending on inventory levels, sales quotas, and manufacturer promotions.

Below, I’ll break down the key factors that affect car prices and some of the best times to shop for a car so you can maximize savings on your next vehicle purchase.

Why timing matters

Dealership pricing isn’t always set in stone, and many factors influence how much you’ll pay. To attract buyers and meet sales targets, dealers often adjust their pricing throughout the year.

Manufacturer incentives

With the exception of small used car dealers, most large dealerships operate as franchises, and are licensed to sell and service certain brands of cars. To incentivize the broader public to shop with dealers, manufacturers often provide special incentives, such as:

• Low interest rates on new cars
• Cashback or money off new cars
• Delayed first payments

These manufacturer incentives are typically advertised on television, billboards, and online ads. Every franchise dealership is expected to honour the manufacturers’ incentives. Manufacturers vary their incentives throughout the year based on the economy, national vehicle sales, supply/demand, and other factors.

End-of-year/new model deals

Auto manufacturers release new models each year. In preparation, both manufacturers and dealers tend to push the previous year’s models toward the end of the year to clear out old inventory and make way for all of the new releases.

Sales quotas and bonuses

Most dealerships have monthly, quarterly, and yearly sales targets to meet. These quotas are typically set by the dealership’s owners. To meet these quotas, sales managers may be more willing to offer deals on vehicles, even if it means the dealership doesn’t make a profit (or even loses money) on these vehicles.

Manufacturers also incentivize dealers to meet higher quotas by promising them better inventory or allocating special models that make their dealership more attractive to shoppers.

Vehicle inventory

Between 2020 and 2023, there was a major shortage of new vehicles. This was due to two reasons:

• Global factories temporarily shutting down in response to the pandemic
• The semiconductor chip shortage (essential components of new vehicles)

The shortage of new cars led to a higher demand for used vehicles, and soon these were in short supply too. During these years, demand was high and supply was low, leading to exorbitant prices on new and used vehicles. This is what’s referred to as a “sellers’ market.”

In 2024, however, with the pandemic and chip shortage in the rearview, the relative price of vehicles began to drop as inventory expanded. This created the auto “buyers’ market” that we’re in now.

Best time of the week

Ideally, you shouldn’t rush to buy a car. However, if you’re in a pinch and need to make a quick purchase, the weekends are the best time of the week to buy a car. Since many people are off on the weekends, more people are shopping around at dealerships, and customers typically have more time to hop from one dealership to the next.

Sales managers know this and will often let cars go for cheaper than they would during the week to lock in a sale.

Best time of the month

The final days or last weekend of the month are, by far, the best times to buy a car – new or used. On the first of each month, everyone goes back to zero. Whatever the month’s sales are on the final day of the month are the numbers that contribute to any bonuses that the sales managers and reps may receive.

Because of this, sales managers may be willing to sell a car knowing there’s little to no profit in it, simply because selling the extra unit could push them to a higher tier and get them a higher bonus that will make it worth it.

Best time of the year

It’s a bit more difficult to determine the best time of year to buy a car. However, manufacturers tend to push discounts and incentives on new vehicles during the summer and toward the end of the year around the holiday season.

The nice weather in the summer makes it an ideal time of year to shop for cars, as customers can freely walk around car lots and can freely test drive the cars on roads that aren’t covered in slush and ice. The holidays are another good time to shop as dealers try to clear out old inventory to make room for the newer models.

Final thoughts

Although today’s higher interest rates have made it more costly to finance a vehicle compared to years past, you can help offset this by timing your vehicle purchase around manufacturer incentives and end-of-month pressure on managers to meet sales quotas.

Just make sure that you do your due diligence and know the key features you want to see in your car. The more firm you are in what you want, the less you’ll be pushed into making a decision that you’re not fully confident in.

Christopher Liew is a CFP®, CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers at Blueprint Financial.