Some New Cars Now Sell More Than Their Sticker Price: ‘It’s A New Paradigm’ | New


If you’re looking to buy a new car, you can forget about getting a good deal, at least for now.

With customers returning to the market after the pandemic closed last year and with a continuing shortage of computer chips entering new vehicles, dealerships do not have enough cars and trucks on their lots to keep them busy. keep pace with demand.

As a result, sellers ask for – and get – the best price. Popular vehicles such as the Toyota RAV4 Prime are sometimes priced above the Manufacturer’s Suggested Retail Price, or MSRP.

“Every unit sold sells for a price you’ve never seen before,” said Ivan Drury, senior knowledge manager at

“It’s a paradigm shift in car buying because there are so few new vehicles for sale people are willing to pay for it. And that’s the amazing part. people were hesitating. They were saying, I’m not going to pay MRSP. Now they say I’m going to pay MRSP or even $ 3,000 more, $ 5,000 $ 7,000 above… because if you don’t pay, the guy right behind you is. “

Just a year ago, as stay-at-home orders came into effect in an attempt to curb COVID-19 infections, good deals could be made. Automakers like General Motors have offered zero percent financing for 84 months (that is, seven years) to allow buyers to defer their first payments for up to 120 days.

With cars and trucks sitting on batches across the country, automakers have limited their factory orders for silicon chips that go into brake sensors, power steering, and car navigation and entertainment systems. modern vehicles. Semiconductor companies have turned to consumer electronics, which has seen an increase in demand for chips used in virtual learning, remote healthcare, and working from home.

But as 2020 progressed, car sales rebounded faster than many had thought, and chipmakers struggled to meet orders from automakers. Today, a resurgence of COVID-19 cases in Southeast Asia – where workers in countries like Malaysia are assembling computer chips – is further straining supply chains.

Just days ago, Toyota announced that it would cut North American vehicle production by 40 to 60 percent in August. Ford and GM have also announced similar cuts.

Analysts like Drury now expect new car inventories to remain low through 2022, even as customers clamor to buy.

“It’s like a boulder has been permanently thrown in the water and you’re getting waves instead of ripples,” Drury said. “It’s more like a rock being thrown in there. It’s not going to resolve overnight.”

In California, sales rebounded – up 96% in the second quarter from the same three-month period amid the 2020 lockdown nadir.

In the first six months of 2021, registrations increased 32.2% from January to June 2021. The California New Car Dealers Association predicts 1.8 million new vehicle sales for the year, not far from 2 million that the state has accumulated. every year between 2015 and 2019.

Without the inventory squeeze, dealers say the numbers would be even more robust.

“If the dealers can get (cars and trucks), customers will buy them,” said Brian Maas, president of the association. “It’s a question of supply and demand.”

The used car market is experiencing a similar dynamic.

Inventory constraints have led to another phenomenon that auto analysts don’t remember seeing: demand for 1 and 2 year old vehicles has reached the point where some are selling for as much or more than their purchase price. initial.

“The rental companies are so desperate that they are also looking for these (used) vehicles,” Drury said. “For the very first time, we are hearing about rental companies buying used cars to put them in their fleet.”

But while used car registrations in California in the first six months of the year are up 16% from 2020, it’s barely half the percentage increase in new vehicle sales, indicating that the fever in the used car market may be cooling off, at least in the Golden State.

As for a return to equilibrium in the new car market, Drury said he hopes the supply shortage can be resolved in six months.

“But I’m telling people if you can really wait a year, just do it because even in six months it won’t turn around to the point where you get a rebate,” Drury said. “You’re always going to pay more than you’re used to, especially if you haven’t bought a car in three to five years or whatever your replacement cycle is.”

Figures for San Diego County showed a 35.2% increase in new vehicle registrations in the first six months, more than the 32.9% seen in Los Angeles and Orange counties and 29 , 7% in the Bay Area.

The state’s best-selling vehicle through June was the Toyota Camry, followed by the Honda Civic. The Toyota RAV4 finished third, proof of the long-standing trend of customers towards the light truck segment which includes SUVs.

The combined percentage of hybrid and electric vehicle sales reached 21% – 10% for hybrids, 3.2% for plug-in hybrids and 7.8% for electric vehicles – up from 15% combined in 2020.

Hybrids with a gasoline engine “don’t require a change in driving behavior, but you get the benefits of some electrification and better fuel economy,” Maas said. “So it’s the easiest car to use to go all-electric.”

© 2021 The Union-Tribune of San Diego. Visit Distributed by Tribune Content Agency, LLC.


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