Updated: May 17, 2022
DO NOT buy a vehicle if you can wait until 2022!
As you can see many lots are empty at this time.
This lot normally has over 400 vehicles, in this picture the lot had less than 50.
I have written three previous articles regarding how to buy new and used cars under normal circumstances. The tips and techniques will work again once the computer chips used to build new vehicles is back in a steady supply.
New car inventory is down 50% from the previous year, and trucks are even worse, over 60%. Because of this limited supply, many consumers are paying above sticker price. According to Edmunds and Consumer Reports, used car inventory is also down because of high demand and lack of trade-ins.
To give you an example, I have a 2018 Chevy Tahoe that I bought new for $49,000, including all taxes in September 2018. I had it in for service ( inspection), and the dealer asked me if I wanted to sell it to them or trade it in. It has 36,000 miles, is 35 months old, and is in perfect condition. I was curious, and they offered me $47,500. Under normal circumstances, the Tahoe would have been worth about $39,000 a few months after I bought it. The exact vehicle, if you can find it used, is selling for $54,990 on lots. This is a prime example of what is going on in the market today. The same Tahoe, but 2021 has an MSRP of $63,730 but a selling price of $70,030. Yes, you read this correctly. It is ten percent over MSRP.
I know not everyone will be buying a Tahoe, but I give real examples if you have read my previous articles. My point is every vehicle for sale today is overpriced, and you should stay away from buying until the economy turns in favor of the consumer.
If you have to buy a vehicle now!
It doesn't matter if the vehicle is new or used; here are some tips to help so you don't get taken to the cleaners.
Expand your search. Not finding a good selection in your area? Take a look at the dealerships in the next town, county, or even the state. Be aware that if you are traveling out of state and don't have a trade, many dealerships do not want to sell you a car.
Don't get too set on one color or car. Be flexible; this is not the time to be demanding and wants the exact vehicle you had in mind.
Buy last year's model. If you can find the previous year's model, there can be good savings. I researched a 2020 Buick Envision MSRP of $41,445 had a sale price of $33,997. This is 18% off of the list, which is excellent in this market. I believe you could still receive a better deal than is listed because it costs them money every day that 2020 is on the lot. Another 2% would be excellent but don't get greedy!
Get the most you can for your trade-in. Keep this transaction separate from the whole deal. They might give you a good trade-in; however, you could be paying over MSRP. Better yet, sell your car privately and get the total value of what your vehicle is worth.
Consider a lease as a temporary solution. This could help you financially in the long run. Buy a 24-month lease and then buy a car after the lease is complete.
Buy a car in less demand stay away from SUVs. The sector with the least vehicles is SUVs and trucks. Both have been in high demand for many years and are the highest-priced vehicles on the market today.
Do your Homework. Now more than ever, it pays to do a lot of research before you commit to buying a new or used vehicle.
If you have a lease, buy it out. If you are at the end of a lease, it probably pays you to buy the lease out. The residual value was set when you bought the car and is a lot less than trying to lease another vehicle or buy one. There is an exception to this. Some dealerships want used cars badly, so they offer to pay off your lease and give you money towards a new lease. I have a friend with a Lexes. The dealership paid off his lease early and gave him $2000 towards a new lease making his payments less than $50 what he was paying before.
To help you with your search, here is a list of vehicles that have over two months worth the inventory as of this writing.
Fiat, Buick, Jeep, Volvo, Volkswagen, Infiniti, Nissan
Take a look at articles 1-3 on buying new cars to gain more insight into comparisons and negotiation tactics.
You can still receive 5% off vehicles if you are creative and buy more cars with a higher inventory.