New-car buyers are in the driver’s seat when it comes to picking up a bargain over the next seven days. A perfect storm has created ideal buying conditions before the end of the month.
Showrooms are overstocked following a 23-month slowdown – the longest slump since the Global Financial Crisis a decade ago – and March is the second biggest month for new car sales because it is the end of the Japanese financial year.
However, dealers are even more desperate to move metal as the industry faces the prospect of a temporary shutdown amid the COVID-19 outbreak.
New-car dealers across Australia – and their parts and service departments – are allowed to remain open, with Prime Minister Scott Morrison today declaring “people can still go to car yards”.
Earlier in the week, the Australian Automotive Dealers Association (AADA) had lobbied state and federal governments for parts and service departments in particular to remain open as they are an “essential service” and key to road safety due to their recall work and critical maintenance.
Some dealerships contacted by CarAdvice have introduced a one week on, one week off roster and arranged for staff to use up their annual leave rather than make job cuts.
Some dealerships have rolled back to four-day weeks and may scale back further. Others have allowed office staff to work from home, or had to let some people go without pay for the time being.
All these factors mean dealers are keen to sell cars just to get money in the door and cover their staff wages and bills.
Most car companies are shifting dealers to “manual release” rather than “automatic release” for replacement stock.
That’s car industry jargon for allowing dealers to order cars manually rather than being restocked from the factory automatically, as is the case in normal economic conditions.
While dealers are keen to let cars go for little to no profit just to create cashflow, Australia’s falling dollar has put the squeeze on prices.
Over the past two years the exchange rate between the Australian dollar has weakened against the Japanese Yen, Thai Baht, South Korean Won, US dollar, Euro and British Pound.
This means the landed cost of imported cars has had to go up and, until recently, car companies and car dealers have been absorbing the losses.
“I think you will find most dealers will just want to get cars off the floorplan (the term given to finance arrangements for cars kept in showroom stock),” said one leading metropolitan multi-franchise car dealer.
“It was already the toughest market I’ve ever seen, and then this happens. I’m not sure what the dealer network will look like once this is over.”
The only winners in the meantime, he said, will be buyers looking for a bargain.
“If you’ve got access to cash or finance, it’s a buyer’s market,” said another veteran car dealer. “Unfortunately we’ve seen a number of deals fall over on finance in the last few days. People with casual jobs, or people losing their jobs … it’s been tough for everyone involved.”
Most car companies have "offers" or "specials" tabs on their websites – and allow buyers to calculate the drive-away price before going to the showroom – but experts say it also pays to compare prices from one dealer to another to make sure you're getting the best deal.