Car Deals Start At The End Of The Line

Many people like to buy at the end of the model year, during those year-end cleanout sales. The new models are about to arrive, and they've got to make space for them. Often times you can more easily search for a car deal at this time.

One reason prices are friendlier then is that some manufacturers provide extra money to their dealers to help them sell those year-end leftovers. (They won't get heavy orders for new models if dealers are loaded with last year's cars.) This extra money is called a "carryover allowance," and it's a practice employed most often by Detroit.

General Motors and Ford regularly provide a carryover allowance of 5 percent of the sticker price (that's 5 percent of MSRP, not 5 percent of dealer invoice), which they credit to dealers for every previous year's vehicle sold after the new model of the same vehicle arrives in the showroom. On a car or truck with a $20,000 sticker price, that 5 percent represents an additional $1,000 for you to bargain for.

Chrysler has traditionally shunned carryover allowances. Several years ago, it offered its dealers the choice of a 5 percent carryover allowance or participation in the July-September consumer and dealer incentive programs. As you might expect, the carryover allowance had few takers among dealers, whose basic credo is, "Sell it now and worry about tomorrow later."

Import makes don't use across-the-line carryover allowances, but many of them place hefty factory-to-dealer cash incentives on last year's models of selected vehicles.

One Key Closeout Issue: Slim Pickings

Sometimes year-end pickings can be quite slim, even in a down market. If sales have been depressed for months, both manufacturers and their dealers may write off a model year when it's only half over. Dealers get very selective with their orders as the current year's production winds down, and the factories structure their build out plans to allow dealers to maintain lean inventories of only the fastest-moving models. They're both hoping to end the old-model year without a glut of leftovers, so they can focus all their resources on the new-model launch in the fall.

This occasional attack of sanity among car makers is not necessarily good news for shoppers looking for end-of-year bargains. But more often than not, if your heart's set on a model-year leftover, you'll have many to choose from-assuming there are two or three finalists you'd be happy to drive home.