By Mindy Charsky, next avenue
Kyla Moles has bought a lot of cars in her life, but her latest search for a vehicle felt more like a competition than a shopping expedition. “It was a harrowing experience,” says the 53-year-old office manager and mother of three. Her more than seven-month attempt to buy a new 2022 Hyundai Palisade finally ended in March when she pulled out of a dealership parking lot more than two hours away from her Dallas home.
The anguish came in many forms. Among them: Although she is known for her haggling skills, Moles found that she had little influence. Dealers of a different brand pressured her to buy a used vehicle for more than the price of a new one. She spent hours searching the online inventories of dealerships throughout Texas and Oklahoma.
Moles’ frustrating trip stems from a national problem: demand for cars is outstripping supply, which is hit by a global shortage of semiconductor chips. New vehicle sales for the first quarter of 2022 were the lowest in a decade, according to research firm Cox Automotive.
As Moles and many other buyers have learned, buying a new vehicle today requires ingenuity, patience and flexibility. Healthy doses of luck and digital savvy also go a long way. If you haven’t recently purchased a vehicle, there are a few things you need to know to prepare for the upside down road ahead.
You may be able to walk to a dealership and find the exact car you want. If so, consider yourself extremely lucky. “Customers looking for a new vehicle shouldn’t expect to see lines of vehicles and every trim line on lots like in years past,” says Marc Cannon, executive vice president and chief customer experience officer at auto retailer AutoNation.
Cars arriving on dealership lots generally move fast. Consulting firms JD Power and LMC Automotive forecast 56% of vehicles it would sell within 10 days of arriving at a dealership in April.
To make a purchase decision Speed is important, and so is being willing to compromise. “I tell people the more flexibility you have in terms of colors and bells and whistles, the better our chances of getting something sometime this year,” says LeeAnn Shattuck, who helps customers choose and buy vehicles and she goes by the name “The Girl in the Car”.
Reduced inventories also mean reduced opportunities for test drives. Since buying a car without driving it first isn’t something Shattuck recommends, she had to get creative. He may suggest customers test drive a car in one trim level or even a used one to experience ride quality, for example, and how the seats feel. Renting from a resource like the Turo car-sharing marketplace could also be a solution, she says.
A third option is to borrow a friend or relative’s car; that was how Moles got a taste of driving a Palisade.
Many people who can potentially wait months for a new car are buying through alternative means. Some manufacturers allow customers to order from the factory, for example. Dealers generally handle factory orders, and many handle a lot. “AutoNation’s incoming new vehicle inventory has, for the most part, been pre-ordered,” says Cannon.
Another strategy is to put a deposit on a specific vehicle that is “in transit” from the factory to the dealer. You can find this status attached to cars advertised on manufacturer and dealer websites.
If you see a car in transit that you like, contact the dealership you’re going to and ask if it’s still available for purchase and if you can deposit it. Dealerships have different rules about deposits, and many will require non-refundable deposits that must be paid in person.
Some dealers may propose a third alternative that Shattuck does not recommend. You can pay a refundable deposit to reserve a car that dealers expect will be assigned, as opposed to a specific one with a Vehicle Identification Number (VIN).
It is now common to pay more than the sticker price, which is also called the manufacturer’s suggested retail price (MSRP). Buyers paid above MSRP on 82.2% of all new vehicle purchases in January 2022, compared to 2.8% in January 2021 and 0.3% in January 2020, according to the research firm Edmunds.
“These days I feel like if you get to the sticker price, it’s a good deal,” says Ronald Montoya, Edmunds senior editor for consumer advice.
One way you could pay more than MSRP is if you’re charged for “dealer add-ons,” the extras that dealers install, like window tinting, paint protection, and inflating tires with nitrogen instead of air. “In the past I have refused to pay them,” says Shattuck. “Now it’s more about trying to minimize them or at least turn them into things that are useful to [my specific client]like, ‘Can we have this instead of that?'”
Some dealers are also adding a “market adjustment” that can increase the price by thousands of dollars. “You don’t get anything for it, they just charge you an extra fee because they can,” says Montoya.
Knowing that another buyer is likely around the corner, dealers may not be willing to negotiate these additional costs. However, you can find a better deal if you widen your search radius.
“There are dealers that won’t mark their vehicles and will just charge you the MSRP,” says Montoya. “I’d like to shop at those, even if it means driving an hour or two.” The collaborative website Markups.org can help you see which dealers are adding extra costs.
“The good news is that trade-in values are at record levels, so you can get a lot more than you ever thought you would for your car,” says Montoya.
In fact, Moles was thrilled that the dealer made her a trade-in offer close to what she had originally paid for her “much-loved” 2017 Honda Pilot.
Moles had sought trade offers from more than one source, a strategy that Shattuck recommends. “There is absolutely room for negotiation on the value of your trade,” says Shattuck.
Rising gasoline prices and interest rates could reduce demand for new cars in the short term.
What is more predictable is that the supply side of the equation will continue to be difficult. “Improved inventory conditions are not likely to occur in 2022 as many customers are now waiting for their already reserved vehicles to be built,” according to a statement from Cox Automotive senior economist Charlie Chesbrough.
However, Montoya speculates that car buying may not go back to the way it was before the pandemic. “Dealers have realized that they can get away with having fewer vehicles on site and then charging more for them,” he says. “We may see a reduced level of inventory even when things are going well because of how dealers have adapted to selling in these times.”
Meanwhile, Moles is now a happy driver. “I think my waiting game was perfect,” she says. “[My car] It turned out to be everything I wanted.”
Welcome to My Life in Money, our series on money from Good Housekeeping, where we ask our favorite financial gurus what they think about everything from the best financial decision they’ve ever made to the worst. This week we are talking to catherine morganfinancial advisor and author It’s Not About the Money: 3 Steps to...
Book a luxury getaway to the Hamptons for just $50 thanks to Turo car rental service, but you’ll need to book fast skip to content Table of Contents Fewer cars to choose fromMore information on ‘Factory Order’ and ‘In Transit’Stuck with the price tag, or moreThe market won’t change soon