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Fashion Influences Model-Year Changeover in Auto Industry

Fashion Influences Model-Year Changeover in Auto Industry

By Jeff Youngs, October 11, 2012
Alfred P. Sloan, one of the most famous leaders at General Motors, was the first to take the yearly change in fashion clothing and adapt it to changes in cars. In fact, according to a number of automotive references, GM was the first automaker in the 1920s to annually update vehicle models as a way to capture the attention of consumers.

This model-year changeover became an accepted tradition for decades. During past years, the tradition for the model year begins at the beginning of the fourth quarter--in October--rather than during the first month of the new calendar year. For example, a 2012 model might be sold during a period from October 1, 2011 through September 30 of the following year (or longer, in some cases).

Today's Definition is More Fluid
The definition of model year has changed over time. At J.D. Power, one of our automotive experts, David Sargent, vice president of global automotive, provides a more current explanation and definition of the model year:

"Vehicle manufacturers have some discretion when selecting a model year [vehicle]. The rule is that it can be the current year or current year plus one. For example, on Dec. 28 of 2012, automakers may sell up to the 2013 model year. On Jan. 1 2013, they can sell up to the 2014 model year.  However, they cannot sell two years ahead.

"There may be an occasion when automakers are selling a year 'behind.' For example, a manufacturer may still be selling 2012 model-year vehicles early in 2013. It's a good thing to avoid selling model-year vehicles [that are 'behind'] if possible, as it is generally a reflection of a slow-selling vehicle, or at least one where supply has exceeded demand.

"Typically the dealer will need to offer a larger incentive to the consumer to buy last year's model. Very occasionally a vehicle manufacturer will 'skip' a model year, most often if introducing a new generation of a model and the previous generation is in over supply."

Advertising and Marketing Hinges on Model-Year Changes
Along with the change in the model-year definition over time, the auto industry also initiated changes in advertising and marketing, especially in relation to TV's new season of shows, which is often also at the end of September when the new models debut. The launch of these new TV shows often includes ads for the new models.

The end of the model year for a vehicle also means sales and event opportunities for automakers and dealers to clear their inventory of the current or previous model-year vehicles, often at lower price points. In contrast, the beginning of the new model year often includes a price hike for a new model and, if it is in demand, a higher
dealer transaction price as well.

Auto expert Sargent agrees that in the past the new model-year launches typically occurred at a particular time in the fall. However, he suggests that the concept of the model year has become more blurred over time, as automakers now introduce new models throughout the year.

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