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Best and Worst Months for Deals on Used Cars

MojoMotors Determines When Prices Drop Most on Used Cars

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Mojo Motors logo

Mojo Motors is a used car buying website that takes a lot of the hassles out of used car shopping.

(c) Mojo Motors

There's, believe it or not, a certain science to selling used cars that deals with algorithms and buying habits and types of analytical tools. When all is said and done, though, it comes down to this: when is the best time to sell and buy a used car? Obviously the answer is going to be different depending on which side of the equation you are on.

Mojo Motors has done the scientific research to determine the best months and worst months for buying a used car. (Basically, we're going to concentrate on buying a used car for purposes of this article.) Michael Milstein, the business intelligence manager at Mojo Motors, did the basic research and came up with some interesting discoveries.

But first a little bit of information about Mojo Motors. It is a used car vehicle sales aggregator website that offers a new way to buy used cars: guaranteed pricing at a discount available only through a free membership. When it comes to vehicle sales, it is much more profitable to sell used cars. That explains the proliferation of used car vehicle sales sites. Especially popular are those that aggregate offerings from several used car dealers in a set geographical area like Mojo Motors does.

Millstein came up with these conclusions at his Mojo Motors blog:

  • Dealers drop the price of a car an average of 1.32 times per month, but some months it happens more, and others less.
  • Between July and October dealers drop the price of their cars most frequently, whereas January through March dealers drop their prices least frequently.
  • As the volume of sales increases in the summer months, dealers seem more willing to drop the prices of their used cars.
  • The average price drop on a used vehicle is actually 5.42%.

Those tidbits of info prompted us to have a little discussion with Paul Nadjarian, founder of Mojo Motors. Here are his answers to some questions we raised.

Q. Can this data be used as an effective tool when used car shopping? For example, it's July. You know the average price of a used car is going to drop 5.6 percent. Should you just go to the dealer and offer 5% less off the bat? Tell them you know it's still going to be there a month later. How do you think consumers should use this information?

A. This information should be used to assess market trends, not individual vehicles. The data shows that a dealer will drop the price of a vehicle around 11% in July (5.6% per drop x avg of 2 drops in July). You can't use that as a negotiation tactic. What you should do instead is be aware that July is a good month to catch a great price on a used car and Mojo Motors can keep you aware of these price drops as they happen if you 'Follow' some cars.

Q. What are the conclusions based on? How much data did Mojo sift through to come to this conclusion?

A. These findings are based off the data Mojo Motors aggregated from users 'Following' cars from Jan 1 to Dec 31 2012: 161,385 vehicles and 333,568 price drops were analyzed.

Q. Why is February such a low month for price drops? It would seem in great parts of the country this would be a tougher time to get consumers through the door.

A. Typically, February is a fairly strong sales month for used cars because car shoppers start to receive their tax return checks they can use for a down payment. Since dealerships know this trend, the number of price drops may be lower.

Q. And on the flip side, why the upward trend towards the end of the year? Are dealerships trying to hit year-end numbers?

A. A couple of factors are at work for end of year price drop trends. Firstly, there is a general slow down in car sales during the end of the summer that motivates dealers to drop prices. Secondly, dealerships are working extra hard to pump their sales numbers to clear out inventory as the year comes to a close.

In the market for a used car, then? Looks like July is going to be your best bet to get a deal. As always, though, keep in mind this is general advice and may not apply directly to a used car you are buying. I still have to believe used convertibles sell for less in February!

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