Shoppers looking for the best deal on a new vehicle are typically advised to wait until the end of the year. Traditionally, automakers offered the most generous incentives in the final few days of December, but the ongoing inventory shortage has sunk new-vehicle inventory to record lows and seasonal incentives have taken a dive in turn. While there are still incentives to be found, they’re not as readily available, nor as predictable as they were in prior years.
The main culprit is the relentless microchip shortage, but additional production challenges are piling on, according to Tyson Jominy, J.D. Power’s vice president of data and analytics.
“The truth of the matter is that many parts and components are having difficulty reaching manufacturing plants,” Jominy wrote in an email to Cars.com. “This includes tires, paint resin, wiring harnesses and seats to name a few … so many of the components are also single-sourced, so trouble at one supplier can cripple production at multiple automakers.”
Are Seasonal Incentives a Thing of the Past?
With fewer vehicles to sell, automakers have dramatically scaled back on incentives, and Jominy doesn’t foresee a significant improvement by the end of 2022.
“There are still several incentives out there, but automakers may be using them differently than consumers expect,” he says. “Some incentives will encourage consumers to use the automaker’s captive lender, while others … [offer] 24- and 30-month leases. Note that none of these are large ‘cash-on-the-hood’ levers. Incentives like that are not likely to return en masse until the second half of 2023, which is when inventory levels are projected to increase above the 2 million threshold. Even then, we do not expect a return to extremely large cash amounts.”
This means holding out on buying a new vehicle until the end of 2022 is unlikely to yield the usual incentives found around holiday time. For example, the week of Dec. 31-Jan. 2, 2018, saw an average incentive of $4,529 per car sold, according to J.D. Power. New-car deals looked much different by December 2021, with the average incentive falling to $1,598 — nearly 59% less than in December 2020. And the downward trend continues: J.D. Power estimates that the average incentive for May was $965.
Best Time to Buy: When You Find the Right Car
Along with trimmed-down deals, vehicle availability is likely to pose another challenge. Among Cars.com dealers, new-car inventory has dropped 70% from approximately 3.4 million vehicles to around 1 million from May 2019 to May 2022.
With fewer vehicles on dealer lots and incentives unlikely to rebound by the end of the year, shoppers should be ready to buy a car as soon as they find the right one. Going to multiple dealerships to haggle on the price is not currently an effective way to save and can result in a missed opportunity. Despite the wait involved with ordering a car, this route can be the best choice during the inventory shortage, both for finding the right vehicle and getting the best price.
“It’s important to start the process early,” says Jominy. “Consumers typically think about their car purchase 60-90 days out, but that is not enough time for most shoppers these days. If a car has to be ordered, the wait alone could be three or even six months. And the best way to get a deal is to order the vehicle with a written price. Additionally, a few automakers offer incentives specifically to order a vehicle.”
More From Cars.com:
- Inventory Shortage Update: Should You Wait to Buy a Car?
- How Long Will the Vehicle Inventory Shortage Last?
- How Long Does It Take to Order a Car?
- How to Use New-Car Incentives, Rebates and Finance Deals
- Understanding Factory-to-Dealer Incentives
Best Time to Buy Out Your Lease, Sell Your Car
While shoppers shouldn’t expect significant seasonal cash incentives, they can still use timing to their advantage. This is especially true for those leasing a vehicle and considering buying it out. Since used-vehicle prices have soared due to the shortage, buying out a leased car can be a smart move in 2022.
“That buyout price you were offered three years ago that you may not have thought much about is potentially the best offer you will find,” advises Jominy. “Many lessees will find they are in a positive equity position that they can use as a downpayment on their next vehicle.”
The same goes for shoppers who have a car to trade in or sell. Rising used-car values means it’s a good time to sell an extra car. For example, the median listing price among Cars.com dealers for all used cars in May 2022 was $25,495, up 49% from $17,101 in pre-pandemic May 2019. Although seasonal incentives may be hard to find in 2022, shoppers can offset the higher prices in other ways, such as shopping around for a competitive financing rate and getting multiple offers on their current car to be used on the down payment for a new one.
Cars.com’s Editorial department is your source for automotive news and reviews. In line with Cars.com’s long-standing ethics policy, editors and reviewers don’t accept gifts or free trips from automakers. The Editorial department is independent of Cars.com’s advertising, sales and sponsored content departments.