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Tips on Buying Cars/New 2013 at year's end

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QUESTION: Hello Roger, Thanks for taking my question.  I am hoping to buy a new 2013 Nissan Altima SL.  It is November 2013 and technically it's last year's model, since they've been selling 2014s for months.  I am therefore expecting to pay a substantially reduced price for a new 2013.

My research says a car depreciates 11% - 30% right off the lot, and I figure a one-year-old new car should warrant a similar price reduction.  I live in New England; the MSRP of this model is $27,660 and the researched invoice (carsdirect and NADA) is $25,283.  I figure the midrange of that depreciation rate would result in a price decrease of $5,000 to $6,000.  Am I on the right track? If not, what would be an appropriate price in this situation?  Thank you for your help.

ANSWER: Hi Jacqueline,

Are you on the right track? ...sort of.

The way that the depreciation that occurs is compensated for in order to move the last of the 13's is through subvented APR programs and customer and dealer cash incentives ...aka rebates.

Regardless of when the sell the car the dealer is always going to own for the approximate invoice amount...if that is $25,283 then thats what he paid for it ...that dealer looks to the factory to assist him in moving those cars by offering substantial rebates and/or dealer cash. The dealer cash is money paid to the dealer that he has the option of sharing with the customer or not depending on what it is going to take to move the car. If you go to edmunds.com you can find out how much if any dealer cash is being offered on the car you are interested in.

If you are looking for a great buy then go to autotrader or cars.com and look for a 2013 with 3-8k miles on it. Those are the cars who's cost function isn't tied to an invoice.

Hope that makes sense if not then ask as many follow ups as you want until you are completely satisfied and can give me those perfect 10's on the feedback survey

---------- FOLLOW-UP ----------

QUESTION: Hi Roger,

Thank you for your swift answer; it went to junk mail, so I didn't find it immediately.  I tried to determine the amount of dealer cash being offered, but could not find a prompt on the site to do this.  H ow do I find out how much dealer cash is being offered to the dealer?

I wouldn't mind a used, low-mileage 2013 (I'm set on the 2013 because of the 38 mpg on the 2013 redesign), but if used, it's not eligible for $1500 cash back or two years of free oil change and maintenance.  Also, folks don't tend to trade in this trim within a year.  To be honest with you, I'm a little scared of the car if they do!

If the best deal supports a used car, how do I check to ensure it's not a flood car (another reason I prefer new) or accident rebuild?  Carfax only reports on self-reported incidents, yes?

Thanks again for you help, Roger!

Jacqueline

ANSWER: Hi ... ok to find the incentives for the 2013 Altima follow this link and then scroll down past the ads ...it looks like the 2013 Altima Coupe is the only model of Altima with Dealer Cash ($2,000.00) click on the model you are interested in and you will see not only the customer rebate info but all of the programs that the Altima qualifies for that you may not have thought of.

Also regarding your concerns about a 2013 model yr with low low miles ...there are a zillion reasons that these cars exist ...they could be grounded demo, a repo, a car the owners wife drove, executive car, Nissan employee car, cars comning back after a 12 month lease, cars out of a stores rental department...I did a quick search on auto trader and found 1,000's in the USA. Additionally, most of these cars if purchased from a dealer will be certified which gives them a better warranty than a new car (sometimes by about double) along with better finan cing options (at times) ...

Obviously the screaming deals are going to be found through a private party in distress who can't afford the payments but either way you will be able to buy this car in the color you want with the options you want for way less than 1500 off the original invoice price. Keep asking them ... I will hang with you on this until we find the deal and if you tell me what city and state you are in and what color you want I will check the factory sale auction run list to see whats getting ready to go thru

---------- FOLLOW-UP ----------

QUESTION: Hello again!

I did find the "dealer" column under incentives/rebates after I'd emailed you...oops! I'm buying in the Providence RI market.  I've checked in a 50-mile radius and can't find more than 2-2.5K off the price with a year's mileage on them.  I really don't want to pay 2014 prices for a 2013.  What about rental company car sales--worth looking into?

On another note, should I wait until my interminable follow-ups are answered or rate you after each?  Thanks, Jacqueline

Answer
2013 Altima
2013 Altima  
First of all you are looking at retail prices and not what the car can actually be bought for...not knowing jack squatt about preowned pricing levels in Rhode Island (where a search with a 50 miles radius is a statewide search lol) I checked the Manheim Market reoport or MMR on this car for the New England region (AKA FEMA Region 3) The Manheim Market Report tells us the auction selling price for every single 2013 Nissan Altima 2.5l SL that went through any of their auctions in your region...Manheim is the largest Auto Auction company in the USA. Here is what it said:

Those cars have been going through the auction with an average of approximately 5,000 miles (as the baseline) for $21,200.00 which is approximately $3k below it's wholesale blue book value of $24,069.00 ...in the car biz that car is worth "3 grand back" the reason for this is because when there are incentives on new cars of say $2,000.00 then the market value of the prior yr model with the right miles HAS to be backed up by the same amount (generally speaking) and when there are incentives on the same model year NEW cars as a rule of thumb you double those incentives (unless they are ridiculous like 5k) sooo there is a 1500 rebate on new 2013's so back it up 3k and you get the MMR numbers and you get a number that is about 1500 less than what I would consider a great buy ($21,200 MMR + $1500 = $22,700.00 call it $23,000 max to pay for this car and be getting a good deal.) where does the 1500 go ...it will cost the dealer approx 500 to certify the car plus auction buy fees and arbitration fees + a small profit for the dealer of approx 400-500.

Instead of the rebate of $1,500.00 you can get a rebate of $500.00 and 0% financing for 60 months or 1.9% interest for 72 mos. I don't know what you would qualify for but after talking with you briefly here I already know what your credit looks like...If your credit union has a new car rate of 2.9% for 60 months then the 0% is worth about 3,000.00 (roughly $1,000.00 per pt of interest)

I hope that makes sense. I used the zip code of 02801 and did a search on autotrader and on Craigslist (home of the desperate private party seller) and found these candidates:

Curry Nissan of Chicopee has a couple
Marlboro Nissan has a few
Bourne Nissan has a whole gaggle of these cars
Tasca Nissan has this low mile 2013 2.5SL listed for $23,887.00 so after some gentle grinding using my "best Way to Buy a Car" guidance you could be under $23,000.00 very quickly
http://www.autotrader.com/dealers/dda/index.jsp?dealership_view_name=tascanissan

I am attaching a book sheet on the car you have described w/ 5k miles ...dealers will price these at retail book and use them as a switch car from the sticker shock of a new one. From what I see the MSRP of this car new is around $31,000 +/- which puts the invoice at ~28,000.00 since you will likely pay no less than $28,500 for this car new the question boils down to this ...is it worth almost $6,000.00 real dollars to drive a car with 5k miles on it vs 18 miles a new one would have?

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Roger Alvey

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I can answer any question about the car buying process. I am a recognized industry expert on all issues regarding auto finance, including sub prime and buy here pay here financing, I can answer questions about car lock out systems, GPS monitoring by your bank, and about auto recovery methods and defenses. I am a 20 yr car industry expert and can tell you what to look for in a used car, how to negotiate the deal, help with how to market your own car, and how to negotiate with the internet department of any car store. I can tell you every single way the dealer is set up to beat you and how to avoid those traps, I can discuss all aftermarket and extended service contract products you will be offered in the finance process, I have lectured extensively on "The Best Way to Buy a Car" to civic groups and university students. I am a credit expert and can tell you what the dealer and banks are looking for and the rate you can expect to pay. HERE IS THE LINK TO MY OTHER ALLEXPERTS CATEGORIES WHERE I HAVE ANSWERED LOTS OF QUESTIONS http://www.allexperts.com/ep/3440-114948/Used-Cars/Roger-Alvey.htm HERE IS A LINK TO MY BLOG http://thecarguyz.wordpress.com/

Experience

20 years industry experience in top management of dealerships and dealer groups. Recognized industry expert since 2004 in the Top 10 industry experts for The Gerson Lehrman Groups Auto Industry Council. I also do consulting work for Atheneum Partners, Expert 360, Expert Connect and Coleman Research. I have been a franchise owner and understand all facets of the auto industry from the time the car leaves the factory until it leaves the lot with it's new owner. I have written training materials for both the prime and the subprime sales and finance process.

Organizations
NADA, OADA, NFIB, State Certified Used Car Appraiser

Publications
Special Finance Insider, Dealer, and Automotive News, Gerson Lehrman Group Auto Industry Council News (frequently)

Education/Credentials
Willamette University - Salem Oregon BA Economics Willamette University Graduate School of Business - Econometrics Statistics

Awards and Honors
GM's Award of (their most prestigious award) Given to Dealers who surpass their annual benchmark planning volume while also maintaining Top Box (top 5%) CSI

Past/Present Clients
Citadel Investment Group , Summit Partners US ,Broad Peak Investment Management, Nautic Partners, LLC, Hellman & Friedman Investors, L.P. and over 40 additional money managers, hedge funds and research groups

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