If Santa needs a new hot rod, it could be an expensive Christmas this year, as prices for new and used vehicles hit record highs.
Car buyers shouldn’t expect to see the same clearance discounts as they normally would before the end of the year. A global microchip shortage has left dealers bare, forcing some buyers to wait weeks or months for an order that might not arrive in time for the holidays. While automakers will run familiar campaigns for the remainder of 2021, the incentives, if any, will apply to fewer vehicles and customers could still pay more than suggested retail prices.
Carl Black, 67, of Pontiac, Michigan, is happy he has one more year left on his Cadillac XT5 lease after reviewing new models this week while his vehicle was undergoing service at a dealership: âI wouldn’t pay the price price now. I got mine for a pretty decent price so I would probably pay $ 100 to $ 150 more per month.
Many vehicles are sold before they get to the dealership, said Warren Browne, an auto equipment consultant and former General Motors Co. executive who worked at the automaker for 40 years.
âThe manufacturers take the profits,â he said. “The idea that there would be a customs clearance carnival in December – it’s probably minimal.”
Demand, however, has not declined. Some dealers say it’s the best business they’ve ever seen. The COVID-19 pandemic helped Americans rack up $ 2.3 trillion more in savings over the past 19 months than they normally would have, and the median household checking account balance was 50 % higher in July than in 2019, according to the JPMorgan Chase Institute. “Meet their needs”
Offerings are manufacturer-dependent, but employee discounts help protect customer prices, said Carlito Mojica Jr., senior director of retail development for LaFontaine Automotive Group, which has 29 dealers in Michigan. If a desirable vehicle is not available, there is flexibility on extending leases, and customers whose vehicles do not expire for six months should start thinking about ordering now as wait times can be four to 12 weeks. LaFontaine’s advertising also emphasized preventive maintenance in the event of a shortage of parts.
âMost of our customers have gone through the used channel: newer, low mileage vehicles that meet their needs,â said Mojica. âWe encourage people to do their research. There might be a model that we have (in) inventory that they might not have considered. Some people love trucks and want trucks, and they realize that they don’t need the truck because they don’t transport. A compact sport utility or sport utility in general always meets their needs.
Average transaction prices for new vehicles reached $ 45,598 and $ 28,607 for used vehicles in October, up 14.3% and 27.4% year-over-year, respectively , according to the Automotive Information website. Edmunds.com Inc. Automakers are loading vehicles with $ 5,000 options on most new lot offerings.
âThere might be low-interest financing, some of these programs are available,â said Jessica Caldwell, executive director of Insights at Edmunds. “There won’t be a lot of leeway on the price of the car.”
This is because the vehicle inventory is down 77% from November 2019, a more normal year. This actually represents a plateau, as supply has continuously declined over the year, indicating that the coin shortage may improve slightly, Caldwell said. But stocks remain historically low. “It has already been sold”
A rollover after someone else lost control earlier this month totaled Brian Browne’s vehicle. The 65-year-old from Northville, Michigan, visited a dealership to examine a new Chevrolet Trailblazer SUV. After sitting down and feeling like he was taller than his Equinox, he asked to take it for a test drive.
The salesman said, ‘It has already been sold, “Browne said.” Someone had come 10 minutes before me and bought the car. “
Ordering a new Trailblazer could take months, but Michael Bates Chevrolet Inc. in Woodhaven, Michigan was able to put it in a new Trailblazer last week. It featured a number of attachments for wheel locks, paint protection, and heavy-duty floor mats, but the lease cut Browne’s monthly payment nearly in half compared to purchasing the vehicle. .
“I’m told there are vehicles on freighters in the Pacific Ocean, but no one to unload them,” he said. âThere are used cars on the ground. They don’t have a lot of new cars.
Peter Ngo, Tustin Cadillac’s main dealership in Tustin, Calif., Had no new vehicles on his lot earlier this week with trucks delivering vehicles every one and a half to two weeks. Cadillac launches its Season’s Best campaign, but it doesn’t come with any new offers. Still, Ngo sells two to three weeks in the pipeline.
âDemand is at an all time high,â he said. âThe profitability is really good. Inventory continues to be a challenge, but we can see and feel it improving from the past three or four months.
Chevrolet is also launching its “Cyber ââCash” campaign with $ 500 on top of other offers, while Buick and GMC are bringing competitive offers to the market throughout the month, GM spokesperson Sabin Blake said. in an email.
Volkswagen AG holds its annual âSign Then Driveâ event. It offers $ 0 down payment, $ 0 rental payment for the first month, $ 0 security deposit or $ 0 due on signing on Atlas, Atlas cross Sport, Jetta, Taos and Tiguan models – unlike most models of the past, due to the chip shortage, spokesman Mark Gillies said in an e-mail.
Tom McMenamin, chairman of the National VW Dealer Council and owner of Toms River Volkswagen in New Jersey, says he has about 30% of his regular stock with weekly deliveries. It might take 75 days to wait for a new vehicle, but he’s been creative in getting customers into a new vehicle sooner.
âIf someone needs transportation right now, they can always get a vehicle, but it might not be the color they want,â he said. âIf they order a blue Jetta, it’s going to take three months. I’m going to sell them a new red Jetta that I have, and they can drive this new car, and I will offer 100% refund minus any car damage and mileage when the blue arrives.
Some automakers are pushing orders. As part of its strategy to increase its retail order bank, Ford Motor Co. is offering $ 1,000 on orders for much of its lineup. Its “Get Holiday Ready” sales event offers 0% financing for 60 months, although it may vary by region to stay competitive based on inventory, spokesperson Said Deep said.
“The least bad deals”
Customers pay an average of 11.4% more than the manufacturer’s suggested retail price for a new vehicle, according to the Automotive Information site. iSeeCars.com. Crossovers like the Jeep Renegade, Acura MDX, and Hyundai Kona EV might hurt the least, with buyers paying an average of less than 3% of MSRP.
“These are the least bad deals,” said Karl Brauer, executive analyst at iSeeCars.com. âThis is the world we live in. You’re not going to get a good deal right now. “
The low inventory made the competition between the vehicles available fierce. According to Edmunds, one in 20 new vehicles was sold the same day it arrived at the dealership in the first half of November. Almost a third sold in the first week, which drops to half after two weeks.
âPeople are starting to go back to their lives, to go back to school or university, to the office more,â Caldwell said. “This inherent need for a car to serve as a mode of transportation has definitely increased.”
If customers need a vehicle now, they may have to compromise on color, features and even type of vehicle like a sedan versus a popular SUV or consider driving further to purchase one. . Buyers may have to pay a few hundred dollars for a deposit on orders, and experts at Edmunds recommend getting any price agreement in writing.
Hyundai Motor Co. is running its winter sales event, offering 0% APR for 48 months on 22 vehicles except the Palisade and Ioniq 5 through January 3. Honda Motor Co. Ltd. runs vacations for Acura and Honda, but dealers will determine what offers, if any, are included during the holiday season.
Alfa Romeo will be hosting its Season of Speed ââend-of-year sales event in December. The messaging will direct customers to the online E-Shop portal for the first time.
Customers seem more willing to order a vehicle than in the past, a process that typically takes six to eight weeks, said Jim Schebil, owner / president of Fox Hills Chrysler Jeep in Plymouth, Michigan. It had 17 vehicles, mostly Jeep Grand Cherokee L SUVs, on its lot earlier this week and was eager to have some of the smaller Jeep Compass crossovers in stock in December.
âWe’re going to have smaller, more price-sensitive cars,â he said. âIt means having a full lineup of cars for sale soon. “