Dealers and buyers both play the discount game

TIMING is a vital factor in any business’s decision to buy a new vehicle fleet, saving thousands of dollars in some cases, and costing similar amounts in others.

Perth Auto Alliance CEO Rod Gailey said tax minimisation was one of the key influences in businesses’ thinking leading into June 30.

“Businesses have to ask themselves: ‘Do I make a financial decision now or do I make a mechanical decision based on the age or the performance of the car later’,” Mr Gailey said.

But it is not just business operators that are ruled by the June tax deadline. Mr Gailey said car manufacturers often embarked on discounting strategies to push stock through before June 30.

“There are seasonal times in the year when they [vehicles] are pushed by the manufacturers, and June is one of those periods,” he said.

“There’s a lot of competition in the market, so it’s definitely a buyers’ market. Discounts of 10 per cent to 20 per cent on new cars are going around.”

Holden fleet operations manager Mark Doick said another variable that shaped the car-selling landscape in June was the notable absence of some of the large fleet buyers.

“We find that at this time of year the big end of town have probably wound back their purchases, not only in cars but in all things,” he said.

Mr Doick said this was because often the larger companies and government organisations had spent their yearly budget already, effectively putting them out of the market until July 1 when their new spending budget becomes available.

He said this left the small end of town with good buying opportunities.

“They tend to take advantage of the end of financial year sales,” Mr Doick said.

However, he said Holden was in a strong position, with demand outstripping supply, so heavy discounting was not as necessary.

Overriding all of this is the timing of new model releases this year. In October the three major manufacturers – Ford, Toyota and Holden – will release new models of the Falcon, Camry and Commodore.

For buyers it means not only the traditional end-of-year sales, but also discounting, as manufactures try to clear their existing stock in the lead up to the new model launch.

Ford WA regional manager Sean Parker said it was a case of whether businesses should hold off and wait until the new models are released, or buy a soon-to-be-outdated model at a cheaper rate.

Dealers warn that one of the disadvantages of buying soon-to-be-replaced vehicles was the flow-on effect to their future re-sale values.

Heavy discounting now will undermine the potential resale value of the vehicle two to three years down the track.

“A car that is being heavily discounted at the front end will decrease the re-sale value at the back-end,” Mr Doick said.

For car dealers, or ‘retailers’ as Holden prefers to call them, the best customers are those who have a buying program in place throughout the year.

“A professional fleet manager will be able to achieve a good buy throughout the year,” Mr Doick said.

Next week: What finance packages are available to fleet managers.

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