Now is a great time to buy an SUV. Manufacturers, in a rush to meet the burgeoning demand, increased production on their models, resulting in many dealerships having more inventory than they can sell.
This creates a buyer’s market in that to sell off their overstock, manufacturers have to offer more enticing incentives. Bloomberg Technology
reports discounts on SUVs averaged $3,663 last month, representing a $704 increase over the past year. While this might not seem like much of an increase in discounting on the surface, there are trends developing which suggest pricing might become even more competitive.
The incentives came in part due to SUV manufacturers ramping up production in the fourth quarter of 2016. When they saw how much SUVs were taking off in popularity, they rushed to meet this need by having more models available for delivery. Now that the demand has cooled off some, many manufacturers have a surplus of SUVs they want to sell.
Adding to their pressure are several factors. First, there are more SUV models appearing later this year. Models like the 2018 Dodge Durango SRT have generated much buzz in the media and will be sought after highly. Next, manufacturers have to compete with new game-changing models like the 2017 Kia Niro. The Niro is the most affordable hybrid SUV available, making it a great buy for those who want to lower fuel costs. Lastly, there are the new SUVs many manufacturers will be rolling out later this year, which creates more inventory they must account for.
All these factors signify this year is a going to be a buyer’s market for prospective SUV owners. To help you receive the most from manufacturer and dealer incentives, here are some suggestions:
Factors to Take Into Account for Incentives
There are a variety of factors which go into incentives. Understanding how these factors work will help you gain a better idea of whether you qualify for them. To illustrate, some manufacturers offer enticing lease incentives--Ford is doing a no-money-down lease on its Escape model with payments starting at $199. On the surface, this is an excellent incentive. However, it’s important to keep these things in mind when weighing if deals like this are the right fit for you:
Overall, the more research you conduct, the more confidence you gain when deciding on the SUV. You can also use this information to negotiate more effectively during the time of the transaction.
- First, you must qualify for the lease. When manufacturers offer incentives on lease or vehicle loans, they state not all borrowers will qualify. Therefore, it’s important you check your credit histories to ensure all your information is accurate. At this time, you should make an honest appraisal of your situation. If your credit score is lower, then it’s less likely you will qualify for the incentive.
- If you do qualify for the promotional financing, is it the best deal available? Many manufacturers offer special financing rates or a manufacturer’s rebate. With this in mind, you’ll want to calculate the rebate versus the financing rate to see which one nets you the most savings.
- Why is the manufacturer offering the incentive? Have there been reliability problems with the SUV? You can search for the most reliable SUVs using studies conducted by J.D. Power to find which models are the best to buy.
- Are there better incentives available? Compare different manufacturers to see who is offering the best deals. You can also conduct research on the dealership level, although in this case prepare to receive endless emails and calls from salespeople.
Take Advantage of Holiday Incentives
Manufacturers use holiday weekends like President’s Day to entice you to visit dealerships. Often, they will stretch these incentives over a few weeks--most end by the end of the month--to account for the possibility you have to work during the holiday weekend.
Consumer Reports did an extensive study on all the President's Day incentives. They used factors such as customer rebates, dealer incentives and more to come up with a bottom line price. This is the price you will use when negotiating with the dealership. Here are some examples of how much you can save when taking advantage of holiday savings:
2017 Hyundai Santa Fe Sport AWD 2.0T
- MSRP: $34,345
- Bottom line: $30,585
- Savings of $3,760
2017 Nissan Murano
- MSRP: $39,670
- Bottom line: $35,294
- Savings of $4,376
2017 Buick Enclave
- MSRP: $46,690
- Bottom line: $41,902
- Savings of $4,788
2017 Ford Expedition
- MSRP: $62,930
- Bottom line: $54,902
- Savings of $8,028
As you can see from these examples, you can save significantly by taking advantage of all applicable offers for each of these models.
Time Your Purchase to Benefit Dealerships
Dealerships withhold the lowest prices allowable until they need the sales the most. This means by approaching sales from a dealership’s perspective is one of the most effective ways to help you receive the best value on incentives.
To do this, you’ll want to keep several things in mind. The first is how long a specific model is in the dealership's inventory. Think of it this way, the longer an SUV collects dust on the lot, the more imperative it is for the dealer to sell the vehicle. While many dealers won’t disclose when they received a specific model, you can keep an eye on inventory by browsing the dealership’s website. If you notice the same model on the website for a few months, you can use this as a negotiating tactic.
Along with this, the best time to visit a dealership is at the end of the month when they are trying to make or exceed their sales goals. When dealerships meet their goals, they receive bonuses so you can use this to your advantage. Best of all, you don’t even have to go on the last day of the month. Instead, aim for the last Sunday of the month, as Sundays are the best days to buy an SUV according to TrueCar.
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