David Paul Morris | Bloomberg | Getty Images
Being in the market for a new car right now is challenging to say the least.
Transaction prices remain high on the way to the long Labor Day weekend. While the three-day routes typically hold large sales events to clear their lots and make room for next year’s models, low inventory levels and strong consumer demand mean fewer incentives to sell cars.
“It’s a difficult environment,” said Kelsey Mays, deputy editor-in-chief at Cars.com. “I don’t think it will come as a surprise to buyers, but that doesn’t make the situation any easier.”
An ongoing global shortage of microchips – key components needed to power today’s automobiles – has impacted manufacturers’ production of new vehicles, causing demand to outpace supply. The result was fewer discounts across the board, with some cars selling for more than the sticker price and demand spilling over into the used car market.
According to research by JD Power and LMC Automotive, dealers’ inventory is about a third of what it was before the pandemic. The average time it takes a new vehicle to stand on a dealership lot before it is sold is an estimated 26 days – the first time on record under 30 days. Two years ago – before the pandemic – it was 62 days.
The average price for a new car is $ 41,378, according to JD Power. The average discount – if offered – is around 4.3% of the sticker price. That is less than half of the previous year.
Switching to the used car market is also unlikely to offer much delay. The average price for a used vehicle is $ 27,272, according to auto research company Edmunds.com. That is 25% more than the average price of the previous year.
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Still, when you’re in the market for a new car and hoping to get a decent deal on it, all hope is not lost.
For starters, if you have a trade-in, the value may be higher than you expect due to spillover demand for used cars. Even higher mileage vehicles get more out of it: The average amount paid for cars with mileage between 100,000 and 109,999 rose 31% in June to $ 16,489 from $ 12,626 last year, according to Edmund’s data.
While you may not be able to bring the price of your new car down, it is possible that you could earn more points for your trade-in.
And while the discounts aren’t as generous or widespread as they were on past Labor Day weekends, there are some specials that are worth a second look, even if they don’t apply to your favorite model or brand.
“There are a few cars with decent inventory and incentives,” Mays said.
For example, according to Cars.com, many versions of the Chevrolet Equinox 2021 are available with a factory discount of $ 3,000 or 7 to 11% off price. With this discount in mind, the price would be roughly $ 24,500 to $ 43,000, depending on the features. This offer ends September 30th.
Similarly, the Buick Enclave 2021 manufacturer’s discount of $ 4,250 would result in a price of around $ 37,000 to $ 59,500, depending on the specifics.
If you’re struggling to find something that suits you nearby, it’s worth broadening your search, Mays said. Some buyers – roughly a third – are willing to look for a car they want within a 100 mile radius.
It is not to be expected that this shortage of new vehicles will resolve itself in the foreseeable future.
Senior Manager Insights for Edmunds
You can also consider leasing.
“This is perhaps the cheapest way to get into a new vehicle,” said Ivan Drury, Edmunds Senior Manager of Insights.
Although leases typically have mileage restrictions and you can be charged for excessive wear and tear, they typically only last a few years. So if you’re not in love with the car, at least you won’t have a five or six year loan, Drury said.
Even if you see something you want, don’t wait too long to chase it.
“If you wait … you’re missing something,” said Drury. “We see cars flying out of the parking lots.”
About a third of vehicles are sold at dealerships within a week of hitting them, Edmunds data shows. Many even sell on the same day of delivery.
“This new vehicle shortage is not expected to resolve itself anytime soon,” said Drury.