I had often heard it is beneficial to go car shopping towards the end of the month. I never really knew why. Well, here is my understanding. It is pretty simple.
So, a couple years ago, I bought a new car at a price I thought was pretty good. I really don’t know if I could have done better, but I was satisfied with the outcome. I got about $1500 below MSRP. I really do think that the dealer made minimal margin on my specific sale.
Assuming my belief is true and the dealer made very slim if any margin on the sale, I ask myself why would they do that? Here is my conclusion
1. It was the end of the month and the dealership more than made their planned margin for the month. Making more margin on my specific sale would not have changed the fact that the month from a sales dollar standpoint was a success.
2. The number of cars the dealership sells is another important metric independent of the margin made on those sales. This number is important because I think it factors in to how many new cars the dealership will be able to get to add to its inventory. So, although making margin on the sale is important, at the end of the month, the more important factor is getting the sales volume up.
Seem simple? This is my hypothesis. It makes sense to me.
I do think I got a fair price and maybe it is unusual, but as I like the dealership, I do like to leave money on the table and make it a win win for both the dealer and I. Could I have negotiated the price even lower…maybe…probably…actually yes….but I was happy with the outcome.