Car Advice

Should you buy a runout model or a brand new car?

20 Nov 2015

Isaac Bober 1

On the cusp of a new model being released dealers tend to offer too-good-to-be-true runout deals, so, should you buy a runout model or a brand new car?

WHEN IT COMES TO buying a new car there’s plenty you, as a buyer, can do to tip the scales in your favour and avoid the dealer steering, pardon the pun, the deal. For a start, you can trawl through Practical Motoring, unsubtle plug, and read up on test drive and bargaining tips, but sometimes getting a good deal on a new car can come down to timing.

What we mean here is the time of year when dealers start to turn over current stock to make way for a refreshed or even next-generation car. Call me old fashioned but I’m always wary of buying the first of anything; as my old man always says let someone else discover the faults…

And that’s good advice when it comes to cars because quite often the very first examples of a new model can be plagued with issues that aren’t fully ironed out until the refreshed model is released. Other factors worth considering are the length of ownership, the offers on the table from the dealer/manufacturer, and the general differences between the current new car and next year’s version of the same car.

When it comes to length of ownership, the general rule of thumb is that the longer you plan to own the car the less of an issue depreciation becomes. For those of you who don’t know what that means, depreciation refers to the amount of value your vehicle loses each year. And while the initial depreciation, say, on a 2015 and 2016 model is likely to be quite wide, up to $2000, for example, but once you push that out to five years and even up to 10 years, the difference between the two is likely to be measured in the hundreds of dollars rather than the thousands.

The other thing to consider is what special offers the dealer/manufacturer is offering. For instance, Toyota is offering a range of interesting offers from 0% finance rates, to keen driveway prices on select models to make way for refreshed version next year. Indeed, a friend of mine recently took up one of Toyota’s deals, and while he really wanted a Mazda6 simply couldn’t argue with the maths… So you know, this friend isn’t into cars. And while he was saving a packet on the Toyota he bought, the dealer tried to make up for that by suggesting he take out paint and interior protection for a couple of thousand dollars. No, thanks.

Other makers offer similar deals at this time of year and the savings to be had can run to the thousands compared with next year’s new car.

The other consideration when considering a current model compared with the one out the following year, is to know whether there are likely to be any significant changes. Take the current Corolla, for instance. It’s, more or less, the same car as its predecessor, but it copped some cosmetic work, scored a new infotainment system and, depending on the model, a new CVT, so, if you were comparing the two, you might have held out for the new model rather than taken up a deal on its predecessor.

But even when there aren’t such significant changes, some makers offer running changes like Jaguar is doing with its XE. From the middle of next year the XE will be available with a new, more powerful infotainment unit. And, so, if you were considering the XE you’d be looking at that upcoming spec and either holding out for it, or waiting until the current crop of cars is discounted to make way on the floor for the new model.

While it used to be true that car makers would up the price significantly when they introduced a new model year, many are trying to keep the price rise as small as possible, if they raise the price at all. In January this year, many Japanese vehicles copped running price drops due to the ratification of a free trade agreement with Japan, meaning that tariffs (in place to protect the local automotive industry) were dropped.

So, whether you hold out for the new model, based on what the exact changes will be, depends on those changes and how much you absolutely need to have them. If there are no changes from one year to the next and it’s simply a case of the dealer wanting to clear space on the floor for next year’s model.

In the end, buying a car, especially a new car, comes down to how long you plan to keep it for. Will you hang onto it for more than five years? Or do you want to try and flip it after two or three? If it’s the latter, then the newer the car the better, because you’ll save on depreciation. But, as we discussed this becomes less of an issue the longer you keep the car.

But, if the transition from one year to the next is an all-new car then it might be worth either holding out for another year before buying just to ensure that new car works through any initial teething issues rather than becoming an unofficial member of the maker’s test team. Consider the specification changes from one year to the next and, last of all, remember that you’re in control of the deal when it comes to buying a new car.

Have you just gone through this process of considering a 2015 model over a 2016 model year car, got any tips? Share them in the comments section.