Inventory shortages still plague the auto industry today, and the competition for purchasing new vehicles
is fierce. Not to mention, there’s that word we’re all tired of hearing these days: inflation. Jerry
, the car ownership super app
, shares tips for buying a car in this “seller’s market.”Inflation: Supply and Demand
When the world reopened again in 2021 after global shutdowns, automakers were unable to meet the demands of consumers. With supply chain problems and semiconductor chip shortages, it was an unusual year for the auto industry.
The Labor Department revealed that in 2021, consumer inflation increased by 7%. That’s the biggest increase we’ve seen in about 40 years. And used car and truck prices (partly to blame for the surge) increased to 37% last year.
Consumers can expect the average used car to set them back at least $29,000.
Shoppers in today’s world have to navigate dealership markups, limited selection, and a heightened sense of urgency to make a purchase. Car buying has changed, but that doesn’t mean you can’t still find a car you love at a decent price.
How to buy a car despite inflation
When it comes to buying your next vehicle, cast a net far and wide. On the lot, cars are usually offered in more high-end trims and feature significant markups. Some come with dealer-installed accessories that jack up the price as well.
Check out dealerships outside of your local area and compare. Just make sure they’re close enough to test drive the car you want to buy.
It may also be harder to get dealerships to lower the price, as they know new cars these days are few and far between. However, not all dealerships are marking up cars, so if you see an auto you like, act fast.
Consider ordering the vehicle from the manufacturer. This is a great way to avoid dealer add-ons and markups, especially if you don’t want to rush buying a car. It also ensures that you’ll get all the features you want, including the unique exterior paint color
you fancy. By cutting out the middle man, you’ll avoid the extra cost associated with dealership lot fees and dealership insurance. The MSRP without dealer add-ons can be a beautiful thing—
if you’re patient, that is. You can even send the vehicle configuration you built on the automaker’s website to your local dealership.
Ask for a home delivery when making a deal on your new car. Typically reserved for those cool enough to be “in the know,” home deliveries are now the norm after COVID-19 shutdowns forced countless dealership showrooms to close. To speed up the process, fill out financial paperwork beforehand.
Consider going electric. The heavy competition among EV makers like Ford, Tesla, General Motors, BMW, Toyota, Honda, and Volkswagen has helped drop prices significantly. Brands like Hyundai and Kia are also taking over.
It’s important to think long-term when making such a big purchase—what kind of car do you want to drive for the next 10 years? EVs and hybrids are worth a good look.
Managing expectations despite inflation
Do your homework. It’s important to know the difference between the MSRP and the dealer cost. Prices aren’t as negotiable as they’ve been in the past, so finding a dealership without an MSRP markup can be a major score.
Also, having a short list of cars you’re interested in can make visiting the lot a much smoother experience, especially if they don’t have all the trims available for you to see.
Figure out your financing. Calculate what you’re comfortable paying monthly, as well as what you can spend as a down payment. Financing through your credit union or bank before hitting the dealership can give you a great baseline to compare dealer financing terms. This will also allow you to purchase immediately before another buyer takes your first choice off the lot.
Decide if buying a car used is worth it. The used car market used to be the place to go for incredible value and awesome deals. Unfortunately, this aspect of the auto industry has also been deeply affected by inflation, with its own shortages and jacked-up prices.
It’s estimated that in the next year, the price of the average used car will far exceed the $30,000 mark. Basically, buying a car that’s one to three years old could cost more than buying it new. Thanks, inflation.
If you’re still down for a used vehicle, certified pre-owned will be your best bet. Though more expensive, these autos will be in better shape, come with a warranty, and you’re more likely to benefit from a subsidized interest rate. Trade-ins are also excellent ways to offset the costs.
Be willing to compromise. You may find the vehicle you want, but it may also be lacking other features you were hoping for. Decide what’s most important to you and if it’s worth going to look at another car.
If you’re looking to buy a car in the large pickup and SUV sector, expect big price increases. However, if you’d rather buy a hatchback, sedan, or smaller car, the uptick shouldn’t be as bad.
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