Let’s be honest: the pandemic has changed everything. How we work, how we socialize, even how we shop. Car manufacturers have not been immune to our “new normal.” Between a global pandemic, a microchip shortage, and other factors, there are less new cars hitting the market. Normally, December would be a great time to think about purchasing a car, but is that the case today?
Usually, now would be a great time to buy a car
2023 is coming to an end, and that means that 2024 car models are about to hit the market. Typically, in December manufacturers discount their 2021 models to make way for new inventory so they can sell the latest and greatest in automobile technology. According to Edmunds, December usually has the year’s highest discount off MSRP – 6.1% on average – and the highest incentives for sellers, giving those buying a car even more room to negotiate a lower price. Automakers and dealerships are usually highly motivated to end the year on a high note with lots of sales, but 2021 is different.
COVID changed everything
Closed factories, reduced staffing, and a global shortage in semiconductor chips which are needed in all modern vehicles means that there are way less cars entering the market. That means that vehicle prices remain high as people are becoming desperate. Even the price of used cars has skyrocketed. According to Edmunds, new vehicle inventory at dealerships nationwide was down by two-thirds in June. All this means that prices are being driven up. Still, if there are discounts, now would be the time to look for them.
A competitive market
It may not be the best time to buy a car, but it’s a great time to sell one. Since March 2020, used cars and truck prices have gone up 43.3 percent according to the Bureau of Labor Statistics’ Consumer Price Index (vs. the 11.7 percent increase in price for new vehicles.) People who lease cars are being pressured to turn their cars in early so that they can be sold. Car buyers are having to “woo” car sellers. Because inventory goes so quickly and demand exceeds supply, there isn’t an incentive to discount car prices currently. However, there are ways to get the best price possible on a new or used vehicle during this difficult time.
How should you look to buy a car during this time?
Shopping for a car can be a stressful experience, especially during a global pandemic. While it’ll be a challenge to find exactly what you’re looking for right now, we have some great tips for having the best possible car buying experience:
Temper your expectations for discounts
If you can find a car you love that’s available for purchase, don’t hold out and wait for a better deal than its current price. Inventory goes quickly in this market, and the chances of finding your dream car a second time for a lower price are slim to none.
Research market prices
With the point above in mind, you also don’t want to get ripped off. Look at the MSRP and Kelley Blue Book prices for new and used cars.
Look out for dealer markups
Unfortunately, some dealerships and private sellers may try to take advantage of the current situation. Make sure the price is fair, even if it isn’t heavily discounted like you had hoped.
Expand your search geographically
If you’re able, extend your search to a reasonable, drivable range. While buying a car in Texas when you’re in Virginia isn’t a realistic goal, look to neighboring cities and even states for inventory. You may have to drive a bit to get to it, but you’ll have a greater chance of finding your dream car.
Don’t get too set on a specific color or model
It’s natural to want a very specific car when shopping. It is a huge purchase, after all. But in this market, try to consider other makes and models that would also work for your lifestyle. Make a list of features that are an absolute must as well as those that would be nice to have. This will help put in perspective what you really want out of your next car and what you’re willing to compromise on. As a plus, it’ll also reinforce what features you’re not willing to sacrifice, reducing the risk of an impulse purchase you’ll later regret.
Consider a different brand
While you may have an affinity for a certain brand of car, consider other makes in a similar model. Some cars are remarkably similar despite being made by different manufacturers. Luckily, these days a simple web search of one car’s make and model against another will yield lots of reviews and results. You may find your alliance to one brand switch to another.
Try a sedan instead of an SUV
Sedans are less popular than SUVs, so it makes sense that there are more of them available in this limited market. People tend to feel safer in SUVs because the driver sits higher up in a larger vehicle, increasing visibility, but these models also tend to have lower fuel economy and increased maintenance due to AWD options, according to Car and Driver. While all types of vehicles have their pros and cons, if your heart is set on an SUV, consider whether or not your needs could be satisfied with a sedan.
Be open to a new OR used car
There’s nothing like that new car smell, but a gently used car can be a more cost effective choice if you can find one. Keep your options open here.
If you have a trade in, use it to your advantage
Because of the car shortage, you may be able to sell your vehicle for even more than you bought it for. When you’re ready to purchase, you may have a higher budget than you anticipated.
Consider a lease as a temporary solution
Leasing a car for a few years until the microchip shortage ends is always a possibility. While you may not be a huge fan of the color or model you lease, you have an easy out in two to three years.
Order directly from the manufacturer, but be prepared to wait
You may not have even considered the possibility, but you can order a new vehicle from the factory. Common in Europe, this ensures you’re getting exactly what you want. But ordering a car from the manufacturer takes time, so it’s not a perfect solution.
Wait until the chip shortage ends
For many Americans, a car is an absolute necessity. But if you have the means, consider waiting to buy until things have improved.
Looking to the future
Everything has ebbs and flows; this season of high car prices won’t last forever. As of November 1, 2021, prices are still on the rise. However, an economist at Cox Automotive told Fortune Magazine that used car prices will continue to rise in the first half of 2022 before slightly decreasing in the second half. Still, it won’t be easy for the supply chain issues to get worked out, and the chip shortage could potentially stretch into 2023. A little patience might be your biggest asset when it comes to car buying during this time.
If you can wait, things will go back to normal
There are still times when you should be able to get a car at a discount. Weekdays, the end of the month, the end of the calendar year, when new models come out, and holiday weekends are historically the best time for deals. Once the chip shortage ends, the patterns of the best time to buy a car should go back to normal. As mentioned above, waiting until things go back to normal may be your best bet.
No matter when you decide to go car shopping, Elephant Insurance can help you protect your purchase. There are many factors to consider when buying a car, particularly in this market, but one thing is for certain: you should be happy with your purchase. Whether you’re insured with us already or looking for a new plan, get a quote with Elephant when you’re buying a car.
Article last updated on October 27th, 2023 at 1:59 pm