Unless you’ve been hiding under a rock (and with what’s been going over the past two years, who could blame you), you undoubtedly heard how difficult it is right now to buy a car. Thanks to the perfect storm of a global pandemic and resulting supply chain issues, picking up a new (or new-to-you) set of wheels is the most difficult its been in recent memory.
A Quick Recap of the Situation
That said, let’s briefly look at why car buyers are dealing with these issues. It begins with auto plants shutting down at the outset of the pandemic in 2020. At the same time, carmakers cut back on orders for semiconductors (these “chips” are essential components in today’s computer-centric vehicles). Not wanting to idle production, chipmakers were able to switch manufacturing to semiconductors for consumer goods: cell phones, tablets, and computers (items in high demand during lockdown).
Fast forward to the car companies reopening their factories, and there’s the realization that essential chips aren’t as readily available as they were before the pandemic. So, that describes, in a nutshell, the supply side of things. But what about demand?
The pandemic caused two things to happen (on top of everything else). First, many urban dwellers didn’t want to take mass transit. And, second, some of these same people ditched city life for less crowded surroundings. Both of these actions required more personal transportation (a car).
Combine short supply with high demand, and we have today’s topsy-turvy car market. It’s a wrong-side-up situation when some late-model used cars sell for more than the brand-new versions of the exact vehicle (because these new cars are unavailable).
Is Now the Right Time to Buy A Car?
The quick answer is “no,” but this needs more explanation. Let’s expand on this as we break things down into three types of car shoppers.
Wants A New Car, But Doesn’t Need One
Perhaps you’re the type of car owner that regularly swaps out vehicles, or that holiday bonus from work is burning a hole in your pocket. Your current car runs fine, and a new ride is a “nice-to-have” thing.
In this situation, just put your automotive dreams aside for a while. Inventory sucks for many models, and most dealers aren’t inclined to offer deals. You know things are weird when a dealer advertises that selling cars at MSRP without any extra markup is a great value. Welcome to the new world of cars.
Will Soon Need A New Car
Your circumstances may include having an older car that’s running fine now, but you know that transmission or something else could go at any time. Or, maybe you’ve got a significant other who’s soon heading back to on-site work, and your one-car household will be in the past. In other words, the need is there, but things aren’t urgent yet. In this case, you’re in a no man’s land when it comes to car buying. Ultimately, it comes down to deciding when to pull the trigger or delaying that purchase until absolutely necessary.
Needs A Car Now
Did your vehicle get totaled? Or, is a lease expiring? There are dozens of reasons why you might need a car now. And while you might be a victim of bad timing, the fact is you’ll have to deal with the current marketplace. It’s not a pleasant thought, but you’ve got no choice. With this in mind, we’ll explore strategies to consider if you’ve decided that waiting out the current car market isn’t possible.
Car Buying Techniques In Today’s World
Understand The Seller’s Market
It’s more of a realization than a strategy, but recognize that the dealer is now calling the shots. If you’re used to walking into a showroom and driving out with a big discount, then consider those occasions to be fond memories. That doesn’t mean there aren’t deals out there, but chances are the bargains won’t involve in-demand vehicles. And some manufacturers are still offering reduced-interest financing but don’t expect over-generous offerings.
The key to buying a car in these times is being flexible with your choices. This can range from equipment to colors. Such an approach may also require looking outside preferred brands or even body styles. It’s no secret that SUVs are in demand, so consider the alternative of a sedan or hatchback. Try making a list of must-have versus nice-to-have features and go from there.
Research, Research, Research
Before setting out on a car-buying adventure, go online and review everything you can. You’ll want to look at availability and especially take note of “incoming” vehicles that dealers are now touting on their websites. An abundance of a particular model could indicate the potential for favorable pricing. Also, use this research time to see how the list of your must-have features aligns with what’s out there.
Look Beyond Local
Don’t limit your shopping to nearby dealers. What’s in demand in your area could be a slow seller in another city or state. And thanks to virtual shopping and easy-to-arrange shipping, looking for a preferred car across the country shouldn’t be ruled out either.
With tight inventories, you’ll want to pounce on the right car. This means having loan pre-approval in place and money set aside for a down payment. However, just don’t jump on any deal.
Buy-Out The Lease
In normal times, buying out a car lease often doesn’t make sense, thanks to inflated residuals. But, with ever-rising used car values, the opposite could be true. Car and Driver reports that used car prices have increased 35 percent in 2021 alone. Just check your contract for the end-of-lease buyout price (or contact the leasing company). And add in any lease-end fees. Then, see what your leased car is worth via an online purchase offer .
Have An Under-Used Car?
While things aren’t so rosy for car buyers, it’s a different game for car sellers as dealers scramble to add to inventories. So, if you have an extra vehicle that’s going unused, consider the value of selling it now.