Car Talk - Hold Off or Purchase Now? This is the big question, but is there an easy answer?

By Jack Biddle

If the incoming National led Government stays true to their word, the expectation is the previous Government’s Clean Car Discount rebate scheme, along with the diesel tax, will be gone by the end of December this year.

So where does this leave potential buyers? Should they take the plunge and buy while the rebate still applies, or hold off and see what develops?

We touched on this topic last month suggesting the tables have turned and the onus and pressure is now back on the new vehicle distributors to move stock rather than wait for potential buyers to simply come and sign up in fear of missing out.

Stock needs to move

Recent nationwide advertising would suggest a number of those new vehicle distributors selling fully electric vehicles are very keen to keep moving stock and are dangling the rebate carrot along with heavily discounted retail prices and/or free accessories to encourage a sale before year end. Some of the discounts have been in excess of $10K.

On the diesel ute side, there are even dealers currently offering to pay the current diesel fee to help keep sales moving.

It seems the consumer can’t lose, but it does make one wonder how much profit there was with fully electric cars when the rebate was initially announced. If discounts and freebies can be offered now that the rebates are set to wrap up, does it mean the cars were overpriced from the start and consumers were focused more on receiving a Government kickback rather than worrying about the actual cost of the vehicle?

In other words, if you sit tight and wait for the rebate to finish, will the retail prices continue to tumble in an effort to keep moving stock? Only time will answer that question.

Globally, the industry is reportedly pulling back on setting bigger targets for battery electric vehicle (BEV) production moving forward. Sales are not increasing as fast as expected which can eventually mean a stockpile of cars rolling off assembly lines with no homes to go to. To move the stock often calls for a reduction in retail prices which also means a big drop in profits (or no profit in some cases) for the manufacturer. It appears when incentives to buy are reduced or removed, sales slow noticeably. Hence the industry’s reluctance to build more vehicles than current future predicted demand requires. The huge ongoing developing costs to improve BEV efficiencies basically depend on funds generated from sales out in the field. Reports are some of the big players are holding off pouring more money into their research and development because of the slowing uptake and reduction in profits to fund future work.

So what should consumers do right now?

Rather than focus on the cost and potential bargains to be had, one sensible option is to centre on finding a vehicle that’s simply fit for purpose.

In the past, purchases have sometimes been made based on a knee jerk reaction and centred on price plus the Government rebate. Range anxiety has then become an issue for some owners and as this technology improves, the distances electric cars can travel will only improve. Does that mean a cheaper fully electric car will drop in value quicker than say a hybrid? Another question that only time will answer.

I did hear a story about a couple who recently decided fully electric was the way to go, so they purchased a vehicle which was on run out and priced accordingly. I suspect the main reason this particular make/model was on runout was because the same model was also offered with an extended battery distance range, which wasn’t that much more expensive and proving to be more popular, so the distributor decided to drop the cheaper option. The couple’s everyday needs however were such that they felt the cheaper option was going to be perfectly fine, it fitted their budget and after some negotiating, the deal also came with an upgraded home charger. When the money went into their bank from the Government rebate, they went shopping and purchased a new spa pool so all up they are very happy campers. They made a call that they are more than happy to live with, have no regrets and are now just getting on with life.

If BEV retail prices do head in a downward direction to help move stock, then one would have to assume so too will all the other non-BEV variants to remain competitive.

So if you do decide to bite the bullet and treat yourself to a new vehicle before year end then, just like the couple mentioned above, stop looking at prices and incentives after signing up, it may only upset you if you do.

In summary then, there is no real black or white answer on when to buy currently in my view. Best advice is to do your homework and make a decision based on what’s best for you and don’t look back.