Why you should buy at the end of the financial year

The Australian automotive market has rebounded rapidly from two years of COVID and a further 12 months of global supply shortages.

In 2024, the market achieved an all-time record of 1.2 million sales even in the midst of a cost-of-living crisis.

So consumers are back in the box seat, able to walk into a dealership that’s overstocked, where they can cut a really good deal.

And the very best time to crunch your local salesperson for the best possible deal is during end of financial year car sales.

These sales commence a month or two before June 30, and can spill over into July, the first month of the new financial year – if dealers are holding too much old stock. The ideal end to the financial year for a dealer is a limited supply of old stock and lots of black numbers on the bottom line of the profit-and-loss statement.

Importers will offer their dealers wholesale incentives to move stock that’s been sitting around for a while. This convergence of stocktaking and financial reporting is the rationale for EOFY car sales.

It’s when the biggest discounts are traditionally available for buyers of new cars.

Toyota has traditionally been the king of EOFY sales. For the calendar year 2024, Toyota sold 241,296 vehicles in Australia, but 20,903 of those vehicles were sold and registered during June 2024. In total then, 8.6 per cent of all Toyota vehicles sold in Australia were registered in that one month alone, and the monthly tally throughout the rest of the year averaged 2000-3000 fewer sales.

Maybe it’s what the psychologists call ‘conditioned response’. We expect to be offered a discount on a new car in June, even when there are no new cars to sell. The importers and the retailers are happy to oblige – and maybe that’s their conditioned response too.

The dealers will talk frankly with any retail customer who is serious about buying a new car prior to the end of the financial year, June 30.

When the price of a car is already slashed to the bone, but the dealer/salesperson still can’t get the buyer across the line on the deal, they’ll contact the wholesaler to reduce the cost of the car to the dealership for that little extra margin to negotiate.

From the customer’s perspective, the potential is there to knock thousands off the price of a new car – tens of thousands even, if the car is a prestige model. It’s not necessary to take delivery right away either. The car can be registered in July or August or later still, if that’s the deal you make.

As long as you sign on the dotted line of the sales contract before July 1, everyone’s laughing. Bear in mind also that the dealers and their respective sales staff have sales quotas to meet every month, so crunch a dealer hard on the very last day of any month and you should get a favourable response.

But June is when the whole retail supply chain goes into discounting overdrive.

Private buyers in particular are in the box seat to save money on a new car at the end of the financial year.

June is often the time of year that the factories offer their retailers massive bonuses to sell vehicles. It’s all about moving slow-selling stock – the wrong colour, or a sedan in a market segment that prefers hatches, for instance. Many of the factory bonuses are available only to private buyers.

“Bonuses come into play at certain times of the year so if you aren’t that fussed over what model you end up driving, look at the cars the dealer seems very keen to move,” says Cliff Chambers, used car and collectible expert at carsales.

“They will be the ones in the front row of the lot with big banners on the windscreen. Selling several of those will likely put the dealership execs in the running for overseas trips, with cash bonuses for the sales staff,” Chambers quipped.

There are many advantages to making a new-car purchase during an EOFY sale. Be aware, however, that the car you’re buying might be built during the previous model year.

Consequently, the car may not retain its market value that well when it comes time to sell. The flipside of that, of course, is that if you intend to retain the car beyond the usual four years, and resale value is less important, keep an open mind about a vehicle ‘plated’ for the previous year.

Resale may be important when it comes time to trade, but what you lose when you sell could be offset – in dollar terms – by what you save buying the car new in the first place. And valuers will always allow more for a vehicle that’s been kept pristine. Your car, carefully preserved, may be worth more as a trade-in than a newer car that’s been given a flogging.

If a dealer is still carrying stock from the previous year, there will be pressure from the importer to move it on, so ask what kind of deal they can do on a 2024 – maybe even 2023 – model. Even better if two dealers have similar cars on old ‘plates’ as you can get them competing with each other.

Another alternative to buying a new car is the demonstrator. We all know that demonstrators cop a thrashing from uncaring tyre-kickers – or do they?

Many dealers – often pushed by the car companies to register new vehicles – are known to put ‘demonstrators’ on the road, but these cars often end up sitting on the used-car lot going nowhere until the right sort of buyer comes along.

And frequently the car has been ordered by the dealer in a specification that will sell, so resale on a demonstrator can be better, and the car can be easier to offload down the track if it has all the nice accessories and is tastefully specified for interior upholstery and exterior colour.

June and December are big months for distributors and dealers, and cars will often be registered just to give the brand a boost in the registration statistics. They, of course, then have to be sold and there is a lot of money to be saved.

This can be very much the case at the prestige end of the market where retail margins are high and discounts on a car with a few thousand kilometres on the clock can be massive. These vehicles might also be loaded up with options as a means of encouraging the buyers who test-drive to tick some extra boxes on the order form.

In the lead-up to the EOFY sales this year, commence planning for the big purchase by deciding what type of vehicle you want to buy.

Few things spell ‘wood duck’ to a salesperson more than the buyer who enters a showroom asking to compare a medium SUV with a sports car, or demanding a $10,000 retail discount on a micro hatch.

Don’t be the person who looks underprepared and over-optimistic. Know what you want before you begin the hard bargaining.

As good as a deal may sound, shop around… On the value of your trade-in too, if that’s a consideration!

And while time may be pressing, as the June 30 deadline looms, try selling the old car privately if it’s neat and tidy and will sell quickly.

Note too that the price you’re quoted by two competing dealers might not be the best possible figure if both dealers are owned by the same dealer group – or perhaps both are owned by the wholesaler/distributor for that matter.

Feel free to nail down the salesperson for any extras they might be willing to throw in to conclude the deal. That could mean everything from floor mats and headlight protectors right up to an extended warranty, but think carefully about accepting accessories in lieu of a cash discount.

Free accessories to the value of $500 may be worth less to you than the cash equivalent, as are finance options if you are financing.

And beware that some EOFY deals may not be everything they promised. When looking at vehicles in your competitive set, be aware of the offer as well as the standard offering.

Most volume-selling brands come with a five-year warranty as standard; quite a few even offer six or seven years of cover. Tesla stands alone in offering just four years of warranty cover. There’s probably little need to accept the offer of a discounted extended warranty unless you plan to keep the car beyond the term of the standard cover.

In summation, don’t enter into a sales contract without the usual ‘due diligence’ you would at any other time of the year.

It may sound obvious, but carsales not only provides reference material to help you decide what sort of vehicle to buy, it also provides a list of current factory offers that’s helpful for tracking down the EOFY bargains (or bargains any other time of the year, for that matter).

carsales is also a useful reference tool you can take with you – via our smartphone app – so you can make an instant appraisal of a deal based on the vehicle’s pricing and specification at the point of sale. That could be the difference between making the right or wrong choice in the heat of the moment.

This article contains general information only. Seek independent financial advice that considers your own circumstances.