December is a great time to buy a new car and this is why

If you’re in the market for a new vehicle, the remaining weeks of December could very well be a great time to buy. Several recurring industry trends converge at year-end, creating favorable conditions that can help you save money. The auto experts at Edmunds have come up with three key reasons why December often delivers the opportunity for better deals — and what to know to ensure you get the best one.

Year-end sales quotas and dealership incentives

Manufacturers and dealers operate under annual targets, and December is when they make their most concerted effort to meet them. According to Edmunds transaction data, December has historically delivered the highest average discounts off the manufacturer’s suggested retail price for both new and used cars. The pandemic somewhat upended that, sending new car prices skyrocketing year-round as demand exceeded supply, but that blip has largely stabilized since 2022.

Typically, as the calendar year draws to a close, automakers and their dealer networks shift into high gear, deploying cash-back incentives, financing specials and price cuts to help them meet sales goals and finish the year strong. As a car shopper, you can take advantage of this year-end push. By choosing to buy a vehicle in December, you are more likely to encounter a dealership willing to make a deal, even if it’s less profitable.

It can get even sweeter for you if you can wait until the final week of the month. Edmunds data shows that the last few days of December — when dealerships are truly up against the wall of both monthly and annual deadlines — tend to produce the deepest discounts of the year. Think of it as the auto industry’s version of a clearance countdown when every sale counts a little extra.

Outgoing model year inventory and clearance deals

As new-model-year vehicles begin to arrive, many dealerships find themselves with previous model-year vehicles still on the lot. These outgoing models become ripe for discounts because they’re taking up space and declining in value. In a handful of states, dealerships are also required to pay a tax on the value of their inventory on the lot as of January 1. This is a massive hidden motivator that drives desperation on December 31, specifically for vehicles that have been on the lot for 90 days or more.

Edmunds highlights that vehicles from the outgoing model year or those undergoing minimal changes often get steeper incentives. While new models are launched year-round these days, December is when current-year models still on the lot are targeted by sales managers as “must-move” inventory. Currently, that means 2025 vehicles will receive the largest discounts.

Accordingly, you can also maximize your savings if you can be flexible on features, trim or color, so the deals on carry-over models can be substantial. If the vehicle you want hasn’t changed dramatically from year to year, you may be able to purchase a car that’s essentially the same as a new model at a lower price.

More financing leverage in December

Beyond price reductions, December offers an advantageous backdrop for better financing terms on new vehicles. Edmunds’ research shows that automakers and their financing arms often bundle lower interest rates, longer promotional terms or enhanced lease offers at year-end in tandem with their clearance efforts. For example, an automaker might offer special 0% financing on certain vehicles for well-qualified buyers. Getting 0% financing, or even 2%, is a big savings over the standard financing rate of 6%-7% currently.

Dealers eager to clear out their new vehicle inventory before the end of the year may be open to negotiation on specific vehicles — especially those that have been on the lot for a while. You can check the days on the lot when you browse Edmunds inventory.

For shoppers who have done their homework — secured preapproval, identified the trims they’re willing to consider, and are ready to sign — this timing can offer both a lower purchase price and a lower cost of borrowing. Buyers can gain even more leverage by being strategic: a dealer may have several examples of the same model, some of which have been in inventory for an extended period. Each day a car sits unsold costs the dealership more. That creates extra motivation to discount older inventory or specific vehicles.

In short, it’s not just about when you buy, but which specific car you target. The right combination of timing, financing and flexibility can make December deals even more rewarding.

Edmunds says

December packs together three powerful forces for buyers seeking the best deals: dealer urgency to hit quotas, clearance of outgoing-model stock and enhanced financing leverage. Make sure to get an early start on the shopping so that you have a better selection and don’t feel pressured to make a hasty decision.

Picture Courtesy: AP Photo/David Zalubowski, File