Tips for buying a new car in today’s market

Kayla Moles has bought many cars in her lifetime, but her latest vehicle search felt more like a race than a shopping expedition.

“It was a harrowing experience,” says the 53-year-old office manager and mother of three. Her seven-month quest to buy a 2022 Hyundai Palisade finally ended in March when she drove off a dealer’s lot more than two hours from her home in Dallas.

Suffering came in many forms. Among them: Although known for her bargaining skills, Moles found she had little influence. Dealers of a different brand pressure her to buy a used vehicle at a price higher than the cost of a new one. She spent hours searching online inventory of car dealerships in two states.

The Moles’ disappointing ride can be traced to a national problem: demand for cars is outpacing supply, which is being strained by a global shortage of semiconductor chips. New vehicle sales in the first quarter of 2022 were the lowest in a decade, according to research firm Cox Automotive.

As Moles and so many other buyers have learned, buying a new vehicle today requires resourcefulness, patience and flexibility. Healthy doses of luck and digital savvy are also very important. If you haven’t shopped for a vehicle recently, there are some things you should know to prepare for the upside down road ahead.

Fewer cars to choose from

You may be able to go to a dealership and find the exact car you want. If so, consider yourself extremely lucky. “Customers looking for a new vehicle shouldn’t expect to see rows of vehicles and every line of equipment on lots like in the past,” said Mark Cannon, executive vice president of AutoNation.

Cars that make it to dealer lots tend to move quickly. JD Power and LMC Automotive predicted that 56 percent of vehicles would be sold within 10 days of arriving at a dealership in April.

A quick decision to buy is important, as is a willingness to compromise. “I tell people, the more flexibility you have with things like colors and elements, the better your chances of getting something at some point this year,” says Lee Ann Shattuck, who helps clients choose and buy vehicles and is called “Car Chick.”

Small inventory also means little test drive opportunities. Since buying a car without driving it first isn’t something Shattuck recommends, she had to get creative. She can offer customers to test drive a trim-level car or even a used car to experience, for example, the ride quality and how the seats feel. Renting from a resource like the car-sharing marketplace Turo can also be a solution, she says.

The third option is to borrow a car from a friend or relative – which is how Moles was able to test out the Palisade.

Learn about “Factory Order” and “In Transit”

Many people who can wait months for a new car buy through alternative means. Some manufacturers allow customers to order from the factory. Dealers usually handle factory orders, and many handle a lot. “AutoNation’s incoming new vehicle inventory is, for the most part, pre-ordered,” says Cannon.

Another strategy is to place a deposit on a specific vehicle that is “in transit” from the factory to a dealership. You may find this status attached to cars that are advertised on manufacturer and dealer websites.

If you see a transit car you like, contact the dealer it’s going to and ask if it’s still available for purchase and if you can put down a deposit on it. Many will require non-refundable deposits that must be paid in person.

There is a third alternative that Shattuck does not recommend. You can pay a refundable deposit to reserve a car that the dealers hope they will be allocated — as opposed to a specific one with a Vehicle Identification Number (VIN).

“They’re taking your money without a car to tie it to,” Shattuck says. “You should never put down a deposit on a car they don’t have a VIN for.”

Stuck at sticker price or more

It is now common to pay more than the sticker price, which is also called the manufacturer’s suggested retail price (MSRP). Buyers paid above MSRP in 82.2 percent of all new vehicle purchases in January 2022, compared to 0.3 percent in January 2020, according to Edmonds.

“These days, I think if you get to sticker price, it’s a good deal,” says Ronald Montoya, senior editor for consumer advice at Edmunds.

One way to pay more than MSRP is if you’re charged for “dealer extras” like window tinting, paint protection, and filling tires with nitrogen. “I’ve refused to pay for them in the past,” says Shattuck. “Now we’re more about trying to minimize them, or at least make them things that are useful.” [my client]for example “Can we have this instead?”

Some dealers also engage in a “market correction” that can raise the price by thousands of dollars. “You don’t get anything for it — they just charge you extra because they can,” Montoya says.

Knowing that another buyer is likely around the corner, dealers may be reluctant to negotiate these additional costs. However, you may find a better deal if you widen your search radius.

“There are dealers that don’t mark their vehicles and will just charge you MSRP,” says Montoya. “I’d like to shop with them, even if it means driving an hour or two.” The crowd-sourced website can help you see which merchants are charging extra.

“One good news is that trade-in values ​​are at record highs, so you may be getting a lot more than you ever thought you would get for your car,” says Montoya.

Indeed, Mols was thrilled that the dealership gave her a trade-in offer that was close to what she had originally paid for her 2017 Honda Pilot.

Moles has sought exchange offers from more than one source, a strategy Shattuck recommends. “There is absolutely room for negotiation on the value of your trade,” says Shattuck.

The market is not going to change anytime soon

Rising gas prices and interest rates may reduce demand for new cars in the short term.

But the supply side of the equation will remain messy. “Improved inventory conditions are unlikely to occur in 2022 as many customers are now waiting for their pre-booked vehicles to be produced,” according to Cox Automotive Senior Economist Charlie Chesbrugh.

Meanwhile, the Moles are now happy drivers. “I think my waiting game was perfect,” she says. “[My car] turned out to be everything I wanted.”

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