Save £Thousands on a New Car

It is possible to save many thousands of pounds on the price of a new car. By using the internet it is easier today than it has even been to get a new car with a decent discount. I recently bought a brand new Audi A7. I am the first registered owner. It was built to my specification. The list price of the car was £51,705. It cost me £35,369. That is a saving of 31.6% (£16,336).

This is a guide to using new car purchasing websites to reduce the amount that you pay for a brand new car. This is a car on which you are the 1st registered owner. I’m not talking about ex-demonstrators, pre-registered or nearly new cars here, but often by using the websites mentioned it is cheaper to get a brand new car than it is to buy one that is already registered. My new A7 cost me less than my local Audi dealer was asking for an almost identical car that was 18 months old.

The basic steps to saving £thousands on a brand new car are;

  1. Choose the car that you would like
  2. Decide what specification you want
  3. Use the websites to find the car at a reduced price
  4. Order the car through the website
  5. Complete the purchase through the chosen dealership

By following these steps you will get a good deal on a new car. However if you want a REALLY GOOD DEAL there are some important principles to understand before embarking on this process. To get the best deal you must be prepared to do the following;

  1. Spend some time researching
  2. Be flexible over the make, model, and specification of the car
  3. Be flexible on the delivery time for your new car
  4. Be ready to place the order (not just browsing)
  5. Be patient / Think ahead
  6. Stay Alert

 

At this point I’m going to mention point f) (Stay Alert – “stick to your decision”). It is extremely important to understand that the dealer is going to try to steer you into buying the car that they want to sell you. This is not necessarily the same as the car that you want to buy. They will place alternatives in front of you that may distract you from getting the original deal. This is explained in further detail below.

Before explaining how to apply these principles to get the best deal I will mention the websites that can be used to get the best deals.

I personally use the following two websites

  • www.carwow.co.uk
    • This website allows you to select the car that you want and then sends the details to a range of car dealers who then provide their best discounted price. This can take a few days to get the offers back.
    • This is the only site that I have completed a purchase through. It worked very well. The information in this article is based on my purchasing experience through Carwow.
  • www.drivethedeal.com
    • This website provides instant discounted prices on the cars that are available to buy through the site. This makes it ideal for researching the maximum price that you should pay for your new car

Other websites that are available for buying discounted new cars include;

 

  1. Spend some time researching

Use the internet, dealers, friends, motoring magazines to discover more about the car that you want to buy. Find out;

  • What model variants are available
    • What engines
    • What gearboxes
    • What trim levels
    • Number of doors
    • Hatchback v Saloon v Estate
  • What equipment comes as standard
  • The List Price of each variant
  • Any manufacturer discounts that are available
  • How much Road Tax will you pay (per variant)
  • What additional options are available
  • The price of the option extras
  • Will these extras increase the Road Tax
  • What warranty is included
  • What are the service schedule / intervals
  • Are there pre-paid service packages
  • Read some reviews to see what other buyers think of the car you want to buy

Also do some research on your current car to find out;

  • What price you would get as a trade-in
  • What price you might get if you sold it privately

All of this information will enable you to make a better informed purchasing decision, and by researching the competition you may get a better deal from your 2nd or 3rd choice of car.

In addition to the manufacturer websites, the following websites are good for researching;

 

  1. Be flexible over the make, model, and specification of the car

Whilst you are researching the car that you think you want, also keep an open mind and consider what alternatives you would consider. The more flexible you are, the better deal you are likely to get.

The alternatives may be the same car but simply a variation in colour (even different shades of the same colour can vary in price by hundreds of pounds). There may be some special edition versions that bundle in a lot of extra equipment.

Other alternatives may be the 5 door version of the car instead of the 3 door, or estate instead of hatchback. Sometimes the alternative may be subject to discounts that your 1st choice is not.

Also consider other similar cars from competing manufacturers. They may have a better deal.

Whilst considering your degree of flexibility, look at the following factors and perform the research in point a) on the alternatives

  • Are there any special edition models currently available
  • What do the competing manufacturers have that you might consider
  • How does the price of the alternative compare with my 1st choice
    • Though remember at this point we are looking at list price – there may be bigger discounts on the alternatives
  • Any manufacturer discounts that are available

Remember that you can enquire about as many cars from as many manufacturers as you want. You will not be buying all of them, but the sales people don’t know that. It is their job to get you to buy from them. If they spend time getting you a quote which you don’t buy it is NOT your problem; do not feel guilty, the sales people are being paid to do their job. OK, it takes more of your time doing the research and getting quotes, but ultimately it is worth it to get the best deal.

When I was researching, my criteria were it had to be fast, economical, spacious, comfortable and have 4 wheel drive. My 1st choice was an Audi A6 Avant (estate); I was also considering the A6 Saloon. My initial research revealed that the Audi A7 also met my criteria, but the List Price was almost £8,000 more than my 1st choice. Further research revealed that the manufacturer discount on the A7 was significantly more than on the A6, hence closing the gap in price.

At this point be aware of the optional extra equipment and be careful to understand and choose the ones that you feel that are both “must haves” and “nice to haves”. These may become important later in the process when offered alternative cars from stock. If you are absolutely determined to get a factory order car it is worth including a less popular optional extra, which is unlikely to be fitted to the cars that the dealers will have in stock.

The Audi A7 comes with a lot of standard equipment. I felt that folding mirrors were a “must have” extra and my unusual option was the LED Mood Lighting, which  cost about £200, but ensured that my car had to be factory ordered.

  1. Be flexible on the delivery time for your new car

Once the choice of cars has been narrowed down we need to start considering when is the right time to do the deal, when do you want your new car delivered. This is influenced by several factors such as;

  • How long will your current car last (is it giving you problems)
  • How much time is left on the lease of your current car
  • Is the new car a present for a special occasion
  • Do you have a company car that is being returned
  • Do you want to sell your current car privately to get more money
  • Is there a change of registration number coming up
  • When is your chosen car due to be replaced

It pays to know what the manufacturer factory order delivery time is on the chosen model. This gives you time to prepare. You should have found this out whist doing your research in point a). It is usually around one to three months, but can be longer for popular, newer and rarer models.

If you haven’t got time to wait for a factory order it is still possible to get a discount on a quick delivery car using this method, if fact the dealer will usually try to steer you to take a car from stock; there may even be flexibility to get a slightly better deal. 

The demand for new cars varies from month to month. The following chart shows the UK New car sales numbers for 2016 by month as compiled by the Society of Motor Manufacturers and Traders (SMMT - www.smmt.co.uk ) and published by the National Franchised Dealers Association (NFDA - www.nfda-uk.co.uk )

As can be seen from the chart the monthly sales are fairly consistent at around 170,000 – 200,000 per month. The two most popular months are March and September when the registration number changes; these should be avoided unless you really want to have the latest registration number, though this novelty quickly wears off and you will pay a high price for it. Good deals can be had if you take delivery in February or August, when there are less than 100,000 sales in each of those months. 

The other factor to take into consideration is that most dealers are set quarterly targets that they need to meet in order to be paid a bonus. These bonuses can be huge so are a big incentive. The sales targets are usually broken down by model which means that dealers need to sell cars from across their model range to get the bonus. This means that there can be very good offers on slow selling models if the dealer thinks that they will fail to hit their targets. These targets are normally set on a quarterly (3 monthly) basis the quarters being

  1. January, February, March
  2. April, May, June
  3. July, August, September
  4. October, November, December

Quarters a) and c) include a new registration month. Many people order well in advance for delivery on 1st March and 1st September so dealers generally have good forward visibility of their ability to hit their target for these two quarters. This means that if they are on target to get their bonus then they will be less likely to offer big discounts in February and August.

However the ability to hit the targets and get paid the bonus for quarters b) and d) is less predictable. This makes these quarters the most likely time to get the best deals.

The car you are buying needs to be delivered (and registered) within the quarter in order to count towards the bonus. It is therefore important to place the order in time for the car to be built and delivered. This usually means placing the order in the first month of the quarter i.e. order your new car in April or October for the best deals. It can also work by ordering towards the end of the month in either March or September.

If you are prepared to take a car from stock then there are also excellent deals available at the end of the slow quarters i.e. June and December.

This is fairly complex so here is a summary;

  • For a factory build car the best times to order are;
    • Late March
    • April
    • Late September
    • October
  • For immediate delivery (from stock) cars the best times to order are;
    • June
    • December

However, it is also important to remember that big discounts are available all year round.

Another important factor is knowing where your chosen cars are in their product lifecycle. New or facelifted cars will generally have smaller discounts than those that are about to be replaced. 

  1. Be ready to place the order (not just browsing)

When you get prices back from the websites they are valid for a limited period of time, this is usually around 1 month. If you are not in a position to place the order then you will need to go through the process of getting a quote again.

By the time you place the order you should have;

  • done your research
  • know what cars you would consider and the specification for each of the cars
  • arranged and taken a test drive
  • determined that you are happy with the cars and that they are right for you.

Other things that need to have been addresses

  • Transfer any private plate off your old car if you intend to keep it
  • Settle any outstanding finance on your old car
  • Sell your old car or arrange a trade-in value
  • Have the necessary funds in place for the deposit
  • Understand any finance deal that is being taken to fund the new car
  • Know how many miles you expect to cover
  • Know your likelihood of getting finance (your credit rating)
  • Have the necessary funds in place to clear the balance of any manufacturer financing

By doing this before placing your order it will make the process smother. It will also determine which websites you can use to place your order e.g. not all sites can handle trade-ins.

Knowing you likelihood to get finance is important as many of the best deals will be linked to taking out finance. The finance company makes a contribution to the cost of the new car. This can be £thousands. This discount is only available if you buy the car using the finance. Just to be absolutely clear as it goes against common wisdom – the cash price is often higher than the finance price. When I bought my A7 the manufacturer finance company contributed £4,500 to the cost of my new car; this is 8.5% of the list price; about a quarter of the total discount that I received.

The finance deals available are not always competitive in terms of their interest rates and additional mileage charges. This is not important as you can clear on the 1st day of the deal without incurring any interest. In fact with my Audi I had 14 day to notify the finance company that I was going to clear the balance and then a further 30 day to actually make the payment.

Even with a 0% deal there may be a mileage limit that will incur big penalties for going over the agreed miles. Check all the terms and conditions around early payment costs and additional mileage charges before deciding to retain any manufacturer finance deal.

  1. Be patient / Think ahead

If you are in no hurry to take delivery of your new car then you are in a better position to wait for the right deal and explore alternatives. If this is not possible on this occasion then make sure that you are better prepared next time you change your car.

If the discounts on offer are not very high then consider the time of year and the delivery dates. You may be better holding off until a time when the dealer is more likely to give a better deal (see b) above).

Revisit the manufacturer websites regularly to check for any new deals or discounts. Most manufacturers change them at least monthly, sometimes more frequently.

Understand when the current quotes expire and resubmit the quotes to see if the prices have changed. Some of the websites have a feature whereby they will notify you if the price changes.

You are likely to be contacted by the companies that you have used for quotes and research. Do not feel pressurised into making any decisions, especially if they company has called you; always ask them to put any offer in an email or in writing in the post. You may also be contacted by companies that you have not approached; be especially wary of these and check out these companies before entering into any agreement.  

Keep an eye in the exchange rate between the pound (£) and the currency for the country of the company that manufactures your chosen car for any major change. Most cars are sourced from outside of the UK (even those assembled here have to import the parts). This means that the exchange rate plays a significant part in the price of a car. If there is a big fall in the strength of the pound (as it did after the Brexit vote) then this will lead to price increases over the coming months. Conversely the pound strengthening may lead to price reductions, which will rarely be reflected in List Prices, but can be passed onto the customer as bigger discounts.

The Budget statement can also have an impact on car prices. The change in the way that Road Fund Licence (Road Tax) is calculated that comes into effect in April 2017 may cause manufacturers to reduce the list price of cars that are slightly over £40,000 as this is the trigger point for increasing the Road Fund Licence by £310 per year for the first 5 years. Be careful with this as optional extras can easily push the price back over the £40,000 threshold.

 

  1. Stay Alert

OK, so you have got to the final stages and invested time in getting a great deal. To recap by this point you have;

  • Done your research
  • Decided on your preferred cars, models & specifications
  • Got quotes from various websites
  • Decided on the best deal
  • Done everything to be ready to buy
  • Placed an order for your chosen car

Don’t be fooled into thinking that you can now sit back and relax, or lulled into a false sense of security. It is important not to get distracted and fall foul to some last minute tactics. Remember that the job of the salesperson is to get the best deal for them. It is up to you to get the best deal for you. At this stage it may be that what is best for you is one of the alternatives, but remember that the salesperson is doing this because it is better for them.

You will be offered alternatives such as

  • The same car for immediate delivery from stock (though different specification)
  • An earlier factory slot due to a cancellation with a different specification
  • Alternative finance arrangements

Make sure that you either reject all the alternatives as you are confident that you want the car you have ordered, or take the time to consider each alternative, making sure that the deal on the alternative is at least as good as the deal you got on the order that you have already placed. Do not be rushed into making a snap decision, remember that you have an agreement on place which the salesperson needs to honour. Only change the order if you are absolutely convinced that you are getting an even better deal.

If the salesperson can find you the exact same car in stock with the exact same specification then it becomes difficult for you to insist that you wait until one is made in the factory. This is where it comes in useful to have added an obscure (preferably low cost), factory fit, optional extra. You can insist that it is important to you and it is highly unlikely that they will be able to find a car in stock that has that option. For my Audi A7 this was a combination of insisting on the more comfortable SE suspension and the LED lighting pack.

You will also be offered additional products such as;

  • Service Plans
  • Insurance products
  • Protection treatments

These are all tactics to make more money from you. They may be right for you so I’d never say to reject all of them without due consideration; however most of these products will be available cheaper elsewhere if you take the time to search them out. Only you can decide whether they are right for you and whether the convenience is worth any higher price.

Once this step has been completed you will have a firm order, with an order number. This is the point at which you can relax in the knowledge that you are going to get the car that you want and you have got it for a great price.

 

 

 

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