New 2019 vs New 2020
We are at the time of the year when manufactures are putting huge incentives on last years models. This can be a great time to buy a leftover brand new car at the lowest price. There are a few points I would like to make you aware of before buying that new car at $15,000 off MSRP.
Length of ownership. If you are the type of buyer that will own your vehicle until the wheels fall off, then NOW is the time to buy that leftover model. Don't worry about depreciation because when you're done with the vehicle you might have to pay the junkyard to take it off your hands. Now if you not the 10% that keeps their vehicle forever, I want to go back to Economics 101. The majority of 2019 models have been for sale over 18 months. Your major fleet companies, Enterprise, Avis, and other leasing companies, are flooding the used car market with 19 models. What does that mean for you? It means that there is a huge supply, with little demand. That also means there have been enough transactions to put a solid value on a used 19 model. Before buying a NEW 19 model you can look up what that value will be as soon as you drive it off the lot. This is were depreciation happens the quickest. When purchasing a brand new model as soon as it comes out there is not going to be enough transactions on the used car market to put a value on it for 8 to 10 months.
Technology. I have been in this industry for 13 years, and have seen the acceleration of technology amp up over the last 5 years. From one model year to the next, features that were once $2,000 options will now come standard on the next model year. Things like starting your vehicle from your phone, to the car parking itself, these options are coming quick and becoming standard.
Incentives. If there are huge rebates and discounts on a certain model chances are that vehicle is not in high demand. If it is not in high demand as a new vehicle, its probably not going to be in high demand as a used vehicle. All of this will affect your trade value when its time to upgrade to the latest and greatest.
My advice. If you plan on keeping your vehicle longer than 5 years I would advise going with the leftover model year. Depreciation takes place the most in the first year of ownership. The next four years the vehicle will still depreciate just at a lower pace, it will also give the vehicle more time to absorb that first year hit. If you plan on upgrading every 2 or 3 years, I would advise to purchase the latest and greatest. Buy the new model year as soon as it comes out. The new model year might not have any incentives. So what!!!! that only means it's in high demand. Think about it, would you rather have a vehicle that everyone wants, or a vehicle that the manufacture has to discount 20% for anyone to consider.
I hope this helps shed a little light on buying a new car. Just because there are huge discounts on a certain model year, doesn't mean that's the best deal for you.
If you have any questions about purchasing a new vehicle reach out. My email is [email protected].