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22 Mar 09 Buy 1 new car get 1 for Free a Good Deal for Automotive Purchase?
Auto makers are experiencing one of the most difficult years to sell their cars in the history due to the slow economy. Most car manufacturers have had several consecutive months with 20% or more decrease in sales. Besides the auto bailout, in order to move cars on the inventory list, there are tons of car rebates, car incentives, cash back, special finance rate when you make car loan and special lease program for qualified car buyers. There are some car dealers have commercials or advertisement of B1G1, which means buy one get one free.
This is not a typo. Yes, car shoppers could get a new car for free if they purchase a new car. Many people might be crazy and think how those car dealers survive by having this kind of offers. However, car dealers could not only survive, the price might not be as low as people expect.
Background of Car Price
Cars are eligible for “buy 1 get 1 free” are mostly the cars for the previous model year, and some of them are totally re-designed for the current model year. In order to move them, huge amount of auto rebates are given to car buyers or auto incentives are passed to car dealers. The amount could be from $3,000 to more than $10,000, depends on the car models.
Car dealers make loans to have several hundreds of new cars sitting in their lots. In order to have money pay for their loan, they would sell the “old” cars in order to get cash on hand to pay for new cars. Besides, car dealers have limited lots for cars, so they need space to park their upcoming cars. Therefore, car price would be lower as car dealers would make less on cars on their hands.
What are the catches?
- Car shoppers will get those car rebates and incentives on top of the discounts from the car dealers when they only purchase one vehicle. However, most of the offers require that the first car is purchased at Manufacturers Suggested Retail Price (MSRP), or close to MSRP, which means the car price is inflated as car shoppers do not get those rebates and incentives. By combining rebates, incentives and all other discounts for two cars, the savings could be more or close to the value of the second car, and it is why #2 applies.
- Only certain models are eligible and car shoppers have very limited choices because not every model have enough amount of rebates and incentives to cover the difference. Different trims of the same car model could have different amount of promotions, which lead to the huge difference of car price.
- Normally, the more cars being purchased, the more cars need to be traded in or sold privately for car buyers. Selling a used car privately could be a problem as it takes time and it is not that easy to find a person who would take the car, and at the price you would be looking for. Tradein becomes the choice as most people would save time and efforts with the joy of having new cars, but car dealers usually give out lowball offers so they could make money on the old cars by selling to others. By “forcing” you to get two new cars at once and sell two old cars, they make twice money with one-time effort.
Conclusion
Nothing is free, at least in the automotive industry. No car manufacturers or car dealers would lose money to make deal, even though they do need to sell cars. For people who need two cars at once and get the promotion exactly you want, buy one get one free is definitely a good deal for you. However, for people who do not need two cars or do not like the cars offered exactly, think twice before making the deal as many people regret right after closing the deal.
Tags: Buy 1 get 1 free, Car Buying Tips
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