Skip to main content

Vehicle Shortage Wreaking Havoc with Car Buyer’s Pocketbooks

Washington, D.C. – As Americans begin to see the light at the end of the COVID tunnel, record numbers of buyers are venturing back into auto showrooms. “The problem,” says Jack Gillis, CFA’s Executive Director and author of The Car Book, “is that vehicle inventories are way down which means it’s a sellers’ market. Limited supply is a price-conscious car buyer’s biggest enemy.”

Vehicle inventory is down by about 30 percent which means car dealers have little incentive to negotiate. “The rule of thumb that nobody pays ‘sticker price’ for a new car has fallen by the wayside as dealers stick to the manufacturers suggest retail price (MSRP) on the vehicle label,” said Gillis. In fact, for some particularly popular vehicles in short supply, dealers are charging prices above sticker price.

Gillis’s advice on the best way to deal with this reality: “If you don’t need to replace your car right now, you should wait.” The widely reported computer chip shortage and other repercussions from the pandemic are expected to ease up by the end of the year or early 2022. “By waiting, you’ll have more electric vehicles to choose from, as well as the 2022 models with the latest safety features,” said Gillis.

Unfortunately, there are many Americans who don’t have the luxury of holding off, and need to replace or buy a new vehicle right now. If you find yourself in this predicament, CFA and Gillis are providing the following tips on coping with today’s market challenges.

Ten Tips on Saving in a Seller’s Car Market

  • Shop carefully. You can find some deals and incentives, especially on the less popular vehicles. Everybody is looking for SUVs, but if a sedan meets your needs, you can find some good prices.
  • Shop around online. As car buyers become more comfortable with online vehicle purchases, more and more dealers are offering internet specials. Shop carefully and read the fine print, but these offers can be good negotiating tools when you’re in the showroom.
  • Widen your search process. If buying from a dealer 70-100 miles away will save you money, consider it. You can still take your car to your local dealer for service and warranty work.
  • Avoid the upgrades. Unfortunately, most manufacturers don’t let you pick and choose your options, you must buy them in packages. Skipping the fancy packages on a particular model can save you 10-20 percent.
  • Skip the extras. Dealer add-ons are budget busters. Floor mats, cargo containers, luggage racks and fabric treatments, if needed, can always be purchased later and at far less cost.
  • Decline the extended warranty. Today’s new car warranties are very good and extended service contracts (they’re not really warranties) are not only expensive, but if they actually paid off for most people, they wouldn’t be such big profit centers. Instead, plunk those service contract dollars in a special savings account to draw on if you need post-warranty repairs. Most likely, you can use this account to build up your down payment for your next vehicle.
  • Beware of using longer loans to reduce your monthly payments. While those smaller payments may sound attractive, you will pay significantly more in overall interest costs, and you’ll probably be “upside down” for the first year or two. That means if the car is totaled or you must sell it, you’ll have to make up the difference between your insurance payment (or sale) and the balance on your loan.
  • Shop around for financing. Interest charges are one of the most expensive aspects of car ownership. Knocking a point off the interest rate by shopping around will save you hundreds and lower your monthly payments. Check with your credit union or bank to see what they are offering, so you’ll know if the dealer’s offer is a good one. Warning, very few people qualify for the often-advertised 0 percent interest rates, so don’t get your hopes up.
  • Check out “No Haggle” dealers. No haggle or posted-price dealerships are becoming more prevalent. These dealerships will post a non-negotiable price on the vehicle, saving you the anxiety and pressure of trying to match wits with a seasoned, professional seller.
  • Consider selling your used car yourself. The used car market is hot, and you can usually sell it for more than the dealer will pay you on a trade-in. Those extra dollars can help make up for the higher prices you’ll see in the new car showroom. Also, check out the national chains that offer to buy your vehicle with a price that’s good for 7 days.

 

Comments

Popular posts from this blog

Why Avoiding "I" in Marketing Presentations Matters

  Grant Sheehan, CCUE | CCUP | CEO NCOFCU  You know how things just stick with you? Well, many years ago, my marketing professor started off his class with the following, and it has never left me.  The Power of Perspective: Why Avoiding "I" in Marketing Presentations Matters In the world of marketing, effective communication is paramount. One valuable piece of advice that often comes from experienced instructors and industry veterans is the importance of avoiding the use of the word “I” in presentations and reports. At first glance, this may seem counterintuitive; after all, many individuals feel that personal anecdotes and experiences can enhance a message. However, upon deeper reflection, the reasoning behind this approach reveals itself as essential for achieving impactful communication. Building Objectivity When marketing professionals present their findings or insights, it’s important to establish credibility. Utilizing data, surveys, and feedback from cu...

Fresh First Quarter 5300 Data Is Live. How Do You Compare?

  CALLAHAN RESOURCE Fresh First Quarter Data Is Live. How Do You Compare? The latest NCUA call report data is out, and while you’ve been focused on day-to-day priorities, market shifts might be affecting how you reach your goals. That’s why credit union leaders are already benchmarking performance to spot trends and inform their next moves. Ready to join them? Schedule a free performance analysis session with Callahan to gain a clear view of where you stand. Schedule Now

Both Sides of The Desk!

With over 50 years of experience in the credit union sector, I have had the privilege of observing and participating in its evolution from various vantage points. My journey has taken me from serving as a dedicated volunteer holding critical leadership roles, including serving on the supervisory committee, as director, and as board chairman, culminating in my tenure as CEO for 12 years and now founder and President/CEO of the National Council of Firefighter Credit Unions . This extensive background has enabled me to " Sit On Both Sides Of The Desk ," blending operational expertise with strategic oversight. In this blog post, I want to share how this dual perspective has enriched my understanding of credit union dynamics and fostered more effective governance. By leveraging the insights gained from years spent navigating both the intricacies of daily operations and the broader strategic objectives, I have witnessed firsthand the transformative power of collaboration, communi...

Agencies Issue Exemption Order To Customer Identification Program (CIP) Requirements

WASHINGTON--The Federal Deposit Insurance Corporation, the Office of Comptroller of the Currency, and NCUA, with the concurrence of the Financial Crimes Enforcement Network, issued an order Friday granting an exemption from a requirement of the Customer Identification Program (CIP) Rule implementing Section 326 of the USA PATRIOT Act. The CIP Rule requires a bank or credit union to obtain taxpayer identification number (TIN) information from its customer before opening an account, and the exemption permits a bank or credit union to use an alternative collection method to obtain TIN information from a third-party rather than from the customer, the agencies stated in a joint release. The order applies to accounts at all entities supervised by the agencies. "Since the CIP Rule was issued initially in 2003, there has been a significant evolution in the ways consumers access financial services, along with a rise in reported customer reluctance to provide their full TIN due, in part, to...

Fed Chair To Senate: Tariffs May Trigger Persistent Inflation, Slowing Rate Cut Plans

WASHINGTON— Federal Reserve Chair Jerome Powell told a U.S. Senate panel Wednesday that while the Trump administration’s tariffs may lead to a one-time spike in prices, the risk of more persistent inflation is significant enough for the central bank to proceed cautiously with any further interest rate cuts, Reuters reported. Although economic theory suggests tariffs are typically a temporary shock to prices, “that is not a law of nature,” Powell said, explaining that the Fed wants greater clarity on the scope of the tariffs and their impact on pricing and inflation expectations before making additional moves on borrowing costs, Reuters said. "If it comes in quickly and it is over and done then yes, very likely it is a one-time thing," that won't lead to more persistent inflation, Powell said. But "it is a risk we feel. As the people who are supposed to keep stable prices, we need to manage that risk. That's all we're doing," through holding rates steady ...