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Update: Vehicle supply improves after strike ends
- Black Friday can be an excellent time to buy a car — if you can manage to find incentives for the car you want.
- Vehicle inventory is still tight, which can make finding a deal on your dream vehicle more of a challenge.
- If you want to save money and are flexible on model, the holidays can be a great time to buy a car.
Black Friday can be a time for great deals and savings, which is especially important given inflation’s recent impact on prices. Car prices peaked early this year. While they’re currently trending downward, according to Kelley Blue Book (KBB), shopping with savings in mind is the key to success.
That said, experts warn that 2023’s holiday season might be lighter on big discounts than is traditional.
“While incentives have been on an upward trend all year, inventory is still relatively tight, indicating that major vehicle discounting is not going to be a present under the typical car tree this year,” explains Brian Moody, executive editor at Autotrader.
Black Friday car deals vary by manufacturer
Black Friday car deals are typically set and advertised at the manufacturer level, but local dealerships and large regional chains may also run their own deals. Black Friday car deals typically focus on financing, trade-in credits and lowered prices.
Financing deals are one of the most common Black Friday car deals. The deals are usually backed by the manufacturer’s captive financing company — like Chrysler Capital, Toyota Motor Credit Corporation or Ford Motor Credit Company. Frequently advertised deals include $0 down payment, 0 percent APR and no payments for an extended period. All financing deals are only available on approved credit. Generally, the better the financing deal, the better your credit score to qualify.
These deals will usually have an equivalent dollar-off discount if you opt not to go for promotional financing. Even if you plan to finance a vehicle, you may be better off securing your own financing and taking the additional money off the sales price.
Many manufacturers and dealerships will offer a set amount off the Manufacturer’s Suggested Retail Price (MSRP) on Black Friday. They also sometimes advertise that they’ll offer a larger dollar amount for qualified vehicle trade-ins. Higher trade-in values lower the amount you must pay in sales tax on the vehicle you purchase, which can be as high as 11.45 percent, depending on your city and state.
In addition to purchase deals, Black Friday car shoppers can also benefit from lease deals. If you decide leasing a car is right for you, you may be able to secure lower monthly payments, lower money down, or higher mileage limits through a Black Friday promotion.
Black Friday deals will not be as competitive as in years past
Manufacturer auto incentives hit a 24-month high in September, according to KBB. The average incentive was $2,368 in September, 4.9 percent of the average transaction price (ATP). That may sound good, but drivers in September 2019 enjoyed average incentives of 10.2 percent of the ATP.
While incentives have been on an upward trend all year, inventory is still relatively tight, indicating that major vehicle discounting is not going to be a present under the typical car tree this year.— Brian Moody | Autotrader Executive Editor
So, while incentives are seemingly trending up, they remain historically low. Incentives tend to grow along with inventory levels, which are still catching up to the full lots found pre-pandemic. That means dealers will not offer the same vehicle discounting level as in previous holiday seasons.
If you have been waiting for the holiday season to make a vehicle purchase, understand that waiting for holiday sales likely won’t make a big difference.
Current car buying environment
In his mid-October bi-weekly update, Cox Automotive’s chief economist, Jonathan Smoke, shared that the available supply of new vehicles is increasing. New days’ supply is the highest since early spring of 2021, at 2.26 million units. Inventory is far below 2019’s supply but up over 2022.
Used supply, on the other hand, is down 8 percent versus this time last year in terms of days supply and down 10 percent compared to 2019. On top of this, any shift in inventory may not remain strong if the automotive strike continues, Moody warns.
“Should the UAW strike continue into November or beyond, it will further compound inventory constraints, challenging consumers both on price and availability,” he says.
And the current interest rate environment isn’t favorable if you plan to finance a car. Unless you can pay cash, you’ll pay significantly more interest to buy a car now than this time last year.
If you don’t urgently need a car, you may want to avoid the Black Friday car sales this year and keep saving cash. Even if interest rates stay high, you can put more money down and save on financing costs.
Other end-of-year car sales
While Black Friday is all about deals, other winter holidays also offer savings. If you can be flexible across different makes, models and styles, you may be able to find discounts later in the year around Christmas or New Year’s Eve.
Once the holiday season passes, consider checking out deals in your area. Many dealerships offer special end-of-the-year discounts because they are aiming to reach sales quotas. On top of this, many dealerships are making room for the newer models. However, remember that advertised deals are not consistent across all dealerships. Instead, determine which local dealership has the most competitive deals.
Get preapproved before heading to the dealership to save on interest
Securing preapproval for an auto loan is an essential first step before shopping during the holidays or year-round. The preapproval process will provide you with a clear picture of your budget and price range and help you come to the negotiating table with leverage.
You may find that you qualify for competitive interest rates through an online bank or local credit union. This can give you the power to negotiate for an even lower purchase price if you don’t need to chase after any specialty promotional financing the dealership is offering.
You can quickly find out how much car you can afford and compare loan terms and interest rates across multiple lenders using our prequalification tool. It only takes a few minutes and won’t hurt your credit score.
The bottom line
If you need a car soon and can be flexible, Black Friday deals can be found. But don’t expect them to be as great as they were pre-pandemic. If you can wait, you may be able to find better deals at the end of the year or next year when inventory becomes more plentiful.