If you need to buy a new car this year, you’ll need to contend with a wide-ranging transformation of the marketplace. Last year, a worldwide shortage of semiconductor chips took hold of the auto industry, leaving behind a shortfall of vehicles. In many cases factories closed down and stopped making new cars. A scarcity of demand also kept inventory down as people increasingly worked from home and their kids didn’t need transportation, as they were home-schooled because of the COVID-19 pandemic.
But vehicle demand has now rebounded after that stagnant period. So what should car shoppers expect for 2022? Unfortunately, much of the same. Near empty dealer lots continue to be the norm. Know that you can still find vehicles that won’t break the bank. Here is a lowdown on how to navigate today’s challenging new car market.
The current marketplace
Slimmer inventory, limited options
Dealers and automakers realized that packing lots with large numbers of cars, trucks and SUVs was a huge drain on profits. So car dealerships today continue to have a limited selection—CarGurus reports inventory levels are down 64% over last year. With the lots sparse, shoppers are seeing even less of a range of options and trim levels in showrooms.
The cost of cars has climbed globally due to heightened demand, inventory constraints, labor shortages—all exacerbated by reduced supply of chips that are integral to automobile production.
Supply and demand being what it is, record-low inventory has created record-high transaction prices on average. And dealers are much less likely to come down on price since they know there aren’t many other options available to you.
Online buying is in
The traditional car-dealer experience where consumers get their car from a dealership has shifted, as much more of this process moved online. Car companies and dealers learned to cope with lesser inventories by adapting to a build-to-order model. From their point of view, preorders have now become a more efficient way to run their business.
What changes does this mean for shoppers? Everything—from discovery—”what car is right for me?”—all the way through the transaction itself. So you’ll be able to buy the car online all the way through delivery without setting foot in an auto showroom. This method gives buyers a safe and convenient transaction, even from dealers outside one’s local area.
According to a recent study from Cars.com, 41% of survey respondents say they plan to preorder their next vehicle. Of the 16% of car shoppers questioned who actually already preordered a new vehicle, 98% enjoyed the experience and said they’d do so again.
Buying used may not be a better option
Thinking of saving money by choosing to buy a used car? Think again. Edmunds forecasts that in the coming year, the average used vehicle price will surpass the $30,000 mark for the first time. Prices for 1- to 3-year-old vehicles will also often approach or exceed brand-new pricing.
Tips to buying in the new marketplace
- Consider delivery
With less activity in showrooms, a shift to home deliveries makes sense for all involved. This helps you avoid what could be hours of waiting at a dealership. You can take delivery at home or virtually anywhere you want—just ask. An expert will deliver the vehicle to you and give you all the information you need to operate your new car properly.
- Be ready with your trade-in
If you have a car to trade-in, use it to your advantage. Used car values are up dramatically compared to a year ago. Make sure it’s cleaned up, know its value, and have all vehicle paperwork on hand—including service records and its title. Then, use that equity to haggle up on your trade-in value, and you may be able to offset the new car sticker shock.
- Expand your search
Opening up your search area allows you to cast your net farther. Don’t just look in the 10- to 25-mile radius, think 50 miles, 100 miles. Consider buying a car out-of-state and have it shipped to you. You’ll most likely pay a delivery charge, yet the overall cost can sometimes yield better results when it comes to out-the-door prices.
- Consider other makes, models or sizes
Whether buying off the lot or online, do your research and be flexible. Look at other paint colors, or even at vehicle classes you weren’t considering, like a sedan instead of an SUV. Be willing to compromise on the trim level and features, and maybe the manufacturer and model as well. If you usually buy used, consider new. These approaches can expand your likelihood of driving a vehicle home.
- Preorder your car
Don’t doom yourself to paying above MSRP on your next new car. Custom order the model and specific features you want and avoid what you don’t want. It’s tough to find a vehicle on the lot that matches this test.
Technology allows companies to modernize the way they sell their cars. Today’s digital marketplaces are designed to make the ordering process simple. You can even compare and contrast colors and options so that you can visualize the vehicle and determine exactly what you want.
Set up your financing terms online, too. Save time and effort—skip the sitting around and paperwork shuffle and do everything from home. And if you decide not to purchase, you can simply change your mind at any time up until you pick up the vehicle or have it delivered.
It’ll require patience—many buyers are waiting four months for orders to be fulfilled, with delivery dates pushed back multiple times. In the end, though you’ll have a good deal for the car you wanted, sitting in your driveway.
Resources: Edmunds.com, Inc., freep.com, NBC News, Bankrate, Advance Local Media LLC., U.S. News & World Report L.P.