Car Buying Advice - Getting the best deal

At the time of writing, it’s one week until the ref blows the whistle on the 2009/2010 financial year. This is a crucial time for the car industry – and also a great time to need a new car. It’s the perfect time to secure a real bargain if you’re in the market for a new car. (It’s not a necessarily good time to buy a car for it’s own sake, but it’s a great time to buy one if you need one.)
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Three good reasons there:

First, if you’re a business, you can usually claim a 30 per cent tax deduction for the depreciation of the car – in this financial year, even if you own it only for a few days. If you wait until July 1 (or after) to buy, you have to wait until June 30, 2011, for that 30 per cent deduction.

Second, car dealers are under pressure to make their sales targets. Many people don’t realize that most car dealers are independently owned businesses, which receive hefty and generally undisclosed incentives from the parent car companies if they meet or exceed their targets. So if you can find a car dealer who is just shy of his target, a hard bargain can often be driven towards the end of the month. What they potentially lose on your sale is often more than adequately recouped in target-meeting incentives.

Lastly, June is traditionally a high sales month, driven by businesses taking advantage of the depreciation allowance mentioned above. However, in this financial year many of those sales happened back in December, thanks to the Federal Government’s stimulus package, which gave businesses an extra 50 per cent deduction provided they bought capital equipment by 31 December 2009. So a lot of businesses brought their car purchases forward six months – and if they did that, well, they’re not in the market now. What was great news in December has become June’s problem.

All this means it’s a great time to buy, for the next week, provided you’ve got the cash. But how do you drive a really sharp bargain? First, make sure the car you want is in stock now – once the dealer has it on the floor or in his holding yard, it’s his problem – he’s already bought it from the car company, and he’s paying the interest on it. There’s no real point in trying to bargain hard on a car that there’s a four-week wait on. If a car is in stock, you might have to put up with buying a colour or trim level that’s not your first choice. You also must have the cash or the finance ready to go. You can use the dealer’s finance if the rate is right, but be aware that the dealership earns a commission from the finance, so you can use your acceptance of their finance as a bargaining incentive for an even sharper price. Leave your trade-in at home, seeing as high trade-in offers are used sometimes to confuse the deal’s fundamentals, and ask the drive-away price on the car. Subtract 10-15 per cent from that and see how you go – you might have to try more than one dealership to get your sharp price across the line, but if you shave 10 per cent off a $30k car, well, that’s not a bad afternoon’s work.

Lastly, and most importantly, target the right cars. According to Vfacts official industry sales figures, the market in general is up about 20 per cent for the five months to May 2010. Wouldn’t it be good if you could short-list the good cars in the market that bucked that trend and, for various reasons, were (say) 20 per cent down in sales? This would be a fair bit of work, and you’d need access to information not generally made readily accessible to the public. Don’t stress about these last two points – because I just finished that research. Keep reading.

These cars are the ones you can bet are generally in over-supply at the moment and shifting slowly. Dealers will generally be having a hard time moving them, and they’ll be overjoyed, in general, if you front up and make the right inquisitive noises – and the price is probably a lot more flexible than it would be on the market’s hot sellers right now.

The protocols here are that if the market’s up 20 per cent overall, these cars had to be down 20 per cent, compared with the 12 months to May 2009. They also had to be good cars – nothing I couldn’t put my hand on my heart and recommend to a friend is in that list. So that meant, arbitrarily, no Italian cars, and only one French car (‘good’ for me means more than just enjoying the driving; it’s also about being confident you could own them after the warranty runs out…but this is a personal prejudice – plenty of other cars in the market meet my ’20 per cent off the pace’ criteria; I just wouldn’t recommend them to a mate. It also meant not buying into a depreciation disaster.)

Here are the cars:

In the light segment, the best target is the Honda City. It’s 34 per cent off the pace to May this year, with only 860-odd sales as opposed to 1290-odd for the same five-month period in 2009. The Mitsubishi Colt is a solid proposition for a red-hot bargain – its sales are 41 per cent down. And the Peugeot 207 finds itself in a trend-bucking hole – with sales nosediving 27 per cent compared with last year.

The standout under-achiever in small cars is the Focus – 25 per cent fewer sales this year to May 2010 with 3900-odd sales as opposed to 2009’s 5200. Don’t kid there’s not the odd over-stocked Ford dealer out there begging for your attention right about now.

Nothing in the medium segment really stands out, but the Honda Accord Euro is selling 15 per cent less than 2009, so far this year, and Honda’s sales are generally below what the company would prefer – so while the Euro doesn’t quite meet the ‘20 per cent down’ criteria, it’s the best target in the medium segment, as well as a damn good driver’s car.

Large car? Think Honda Accord – the bigger of the two Accords, built in Thailand. It’s down 35 per cent this year so far, with only 1800-odd sales to May versus 2800 for the same period last year. A ripe target, with the V6 even featuring cylinder deactivation to boost economy on highway runs. If you’re more a ‘pimp my ride’ purchaser the Chrysler 300C has fallen into a 40 per cent sales slump this year, and even the Statesman is 21 per cent down – both admirable hard-bargaining propositions.

Premium large car? Think Mercedes-Benz CLS. The four-door coupe is on a massive 59 per cent slide so far this year with only 31 sales to May, against 76 last year to May. Potential for a big-buck bargain there.

People-mover? ‘Yawn’ is the sentiment most commonly expressed over this segment, but if you’ve got more than three kids they’re actually a lot more practical than SUVs – and the Mitsubishi Grandis is a massive 46 per cent down on sales. Up in the premium end of this field, the Chrysler Voyager is also 29 per cent down.

If you want a sports car, the venerated RX8 is a staggering 47 per cent down this year, and the polish seems to have come off Volkswagen’s uber-clever EOS coupe, which is 36 per cent down. Remember, the market overall is up 20 per cent.

Among compact and large SUVs there’s really nothing that shouts ‘bargain’. Those segments are selling like the house is on fire. But in medium SUVs, the Nissan Pathfinder is crying out for help – its sales are 69 per cent on the nose for the periods in question.

Luxury SUVs offer up a couple of high-priced surprises: the X6 (kooky design mistake perhaps?), which is 33 per cent behind last year’s eight-ball, and the mighty Porsche Cayenne, off the pace 29 per cent.

Need a 2WD ute, mate? Holden’s Colorado is on the nose, sales-wise, at least – down 36 per cent. The Mazda BT-50 stinks as well, though not to the same degree. It’s down 21 per cent.

Lastly, if you’ve got $200,000 or more burning a hole in your rather large pockets (and who doesn’t?) there are three hot targets. The sensational Audi R8 has sold just seven units this year – against 22 for the first five months of 2009. That’s a staggering 68 per cent sales slide. (This could be a market saturation or availability thing.) And two very desirable – and very different – Mercedes-Benzes appeared to have stalled. The big, fat … and yet incomprehensibly sleek … CL (think: S Class coupe) is 47 per cent behind in sales volume so far this year (eight sales in 2010 Vs 15 in the first five months of 2009). And the amazingly elegant SL is 48 per cent on the nose, with 16 sales in 2010 against 31 for the five months to May 2009.

Happy hunting. And if there are any rich widows out there who need assistance securing the best possible deal on a CL 65 AMG, and then running it in, drop me a line.