Tips on Buying Cars: End of Model Year, toyota sienna xle, mike feinberg

Question
Hi Bud from a fellow allexperts.com "expert" on the life insurance side...

I have a question.  My wife and I are considering purchasing a minivan, either the Toyota Sienna XLE Limited or the Honda Odyssey.

We are looking at new 2005 models, of course, but I'm wondering how the fact that the 2006 models are likely to come out in the next 2-4 months impacts prices, etc.   Are we better off buying a 2005 now because when 2006 models come out they will be harder to negotiate down?  Are we better off waiting even closer to the 2006 model date?  Are we worse off buying a 2005 now because we could wait until 2006 is available?  I just don't know how dealers react from a pricing/demand/supply situation to end of model year and any help you can provide would be very helpful.  Thank you!

-Mike Feinberg

Answer
Hi Mike, good question, tough to answer.  End of year price policies are set by the manufacturer and depend on how many vehicles they have, or anticipate having.  If they have a lot of them and are making major changes they make it very attractive; conversely, if they do not anticipate many or are making no, or minor changes they will not have to offer incentives.  In the olden days when the market was dominated by domestic mfgr's they had a specific rebate they offered to get rid of the old models but this has changed.  I guess the real answer is what is best for your needs.  If you drive the vehicle a long time and resale value is not a problem and if they are offering substantial rebates you should consider the 2005 model since both Toyota and Honda are reliable, maintain excellent resale value and are excellent vehicles.  If you drive a lot of miles or plan to trade every 2 to 3 years you should probably lean towards the 2006.  If you are not in a big hurry wait until the 2006 pricing is announced and then go to www.edmunds.com and do a comparison of both models and model years.  I realize this answer is VERY general but that is what makes good questions.  If there is any specific question I can help with I will be glad to try.  In any case, the best of luck to you and your wife.  Bud