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Cold Months Leave Dealerships Longing for Customers

March 7, 2014
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This might be the best time to buy cars. The U.S. auto industry has experienced a slump in sales in the first month of the year due to severe winter, and the second month ushered in a flat market. With dealerships desperate for sales, car shoppers can thank the weather for the good deals they can possibly avail.

The harsh winter weather was mostly responsible for the 3 percent decline in January auto sales compared to the previous year. Dealerships tried to improve February figures through Presidents Day sales. However, last month also proved to be a weak month, with a few exceptions. Toyota, Hyundai, Ford, General Motors, Kia, Mazda, BMW, Mini, Volvo and Volkswagen all experienced lower sales. Among the automakers, Volkswagen and Mini lost the most; their sales dropped by 13.8 percent and 43 percent, respectively. Meanwhile, Chrysler, Audi, Mercedes-Benz, Porsche, Jaguar Land Rover, Nissan and Subaru reported growth.

It was not all bad news for the U.S. auto industry, though. A particular segment of the market has been doing well, and the weather is also responsible for its better than expected performance.

Automakers have enjoyed a boost in the sales of all-wheel-drive (AWD) and small sport utility vehicles (SUVs). These automobiles had higher demand because they were created to drive well despite inclement weather. Subaru and Jeep, two brands whose February sales have increased, are known for selling the aforementioned vehicle types.

While the weather is tough on auto sellers as well as drivers, it is deemed a blessing for shoppers. Individuals who are brave enough to visit dealerships in the extremely cold winter weather are expected to get better deals.

According to TrueCar data, there is an excess of dealer inventories—these are at their highest since 2009. Some are convinced that enduring the cold and snow for an auto purchase may be a good idea at this time, and not only because there is a wide selection of vehicles available. With sales slow for the past two months, dealers may be more willing to negotiate to unload units from their lots.

Also, there are more incentives in store for consumers who brave the elements. TrueCar data reveals automakers are giving the most incentives since 2010: the average incentive per consumer climbed 3.3 percent from January and 5 percent from last year to $2,633.

Jessica Caldwell, an analyst at Edmunds.com, does not consider the current inventory and incentive levels as excessive. Nonetheless, she agrees that now until March is a good time to buy a car, mostly because interest rates remain low. In an CBS News article, she pointed out that the end of the fiscal years for Japanese automakers is March, so the month is a particularly good time to buy for consumers who prefer Japanese auto brands.

Those interested to buy a vehicle at a good price are better off postponing their purchase at least until the end of the month. Regardless of the weather, the end of the month remains the best time to make an auto purchase. With sales quotas to reach, dealers are more likely to cut customers a deal in order to sell cars.

Photo credit: Mr.TinDC/ Flickr/ CC BY-ND

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