En español | If you're about to buy a car, watch out for the crash — not among vehicles on the road but between expectations and reality.
Because of the economic downturn during the pandemic, about half of car shoppers are expecting a hefty price cut, according to a study from Atlanta-based Cox Automotive, which owns Kelley Blue Book and Autotrader.com among other auto businesses. Nearly all buyers expect some kind of deal.
The same study warns that those shoppers “are in for a shock when they aren't able to find the great deal that they expected.” Here's what they face: Prices are up, selection is down and manufacturers haven't returned to 100 percent production.
To put a finer point on it, you will have a harder time finding what you want. And if you decide to settle for something else, it still could cost more than you expected.
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"It's a weird time, all right,” says Ben Preston, auto reporter at nonprofit Consumer Reports in Yonkers, New York. “The [auto] market has been changing every few weeks since the pandemic hit. At first, the dealers that were open were bending over backwards to help people — knocking thousands of dollars off, financing deals."
Now, well, this example from car-shopping service TrueCar.com, though extreme, illustrates an about-face: “One customer we know was shopping for a Kia Telluride [SUV], and the dealer adjustment [markup] on the window was $10,000 — if you can believe it,” says Eric Lyman, chief industry analyst at Santa Monica, California-based TrueCar.
Expect to pay a premium for popular models
The Telluride, starting around $32,000 before any markup, has been a hit since its introduction about a year ago. It is one of the fastest-selling new vehicles, according to a report from auto-data specialists at iSeeCars.com, based in Woburn, Massachusetts.
Smaller markups on Tellurides are not unusual, but ones that big are extraordinary, TrueCar says. So if you're thinking about buying a car, your best move might be to wait. When factories return to full production after closures in the spring, dealer lots will fill.
"It generally takes four to six months to adjust inventories on dealer lots” after new vehicle production is seriously affected, as it was with the coronavirus pandemic, Lyman says.
Use the AARP Auto Buying Program to purchase your next car from home
Perhaps you can't wait. Maybe the old vehicle that has served you for a while is now unreliable and unsafe.
"Cars don't decide to break when it's convenient,” says Alain Nana-Sinkam, vice president of strategic initiatives at TrueCar. Or perhaps you previously didn't need a car, but new circumstances now require one.
Short of buying, you do have some placeholder choices depending on where you live and the size of your transportation budget: Ride-hailing services such as Uber and Lyft, long-term car rentals, taxis, subways or other rail lines, and buses. If you do decide to buy now, here are some strategies to consider.
Used vehicles limited
Pre-owned cars aren't the no-brainer they once were. “Demand for used cars is huge right now. And the supply is tight,” says Preston of Consumer Reports.
You don't need an economics degree to know that high demand combined with low supplies equals rising prices. Shoppers in the used market often gravitate toward the so-called off-lease cars, typically turned in after three-year leases, or certified pre-owned models that are low-mileage, late-model cars. The certified used cars typically come with warranties and other extras that you don't get on most used cars.
"Used vehicles were sitting almost untouched at the start of the pandemic. And now they're practically flying off dealer lots,” says Jessica Caldwell, executive director of insights at car-research site Edmunds.com in Santa Monica, California.
The pandemic caused economic uncertainty at the least and direct economic problems at its worst. Thus many potential new-car buyers switched to used vehicles to save money, especially to those off-lease or certified pre-owned models, draining that pool.
"I found the sweet spot to be in the four- to five-year-old range,” Preston says. “I was looking at 2017 models closer to 20 grand, so I started looking at 2015s and they were closer to 15 grand. I thought, Wow."
Because older cars come with more uncertainty than newer ones, Preston suggests checking a credible guide, such as what his publication offers, that uses data to forecast which cars will be reliable as they age.
A possible silver lining: Dealers are willing to pay more to acquire inventory to meet the surge in demand for used cars. That's great news for car owners.
They “can expect to get a higher value for their vehicle if they sell or trade right now,” Caldwell says. “But time is of the essence because there's no guarantee that these unique market conditions will continue for long."
So if you no longer need your car, now could be a great time to cash in on higher prices by selling. Or if you do find an elusive sweetheart deal on a new or used car, your trade-in should be more valuable than normal.
2019s you might find new
These models have a higher than average percentage of never-owned 2019 leftovers still on the lot.
1. Dodge Grand Caravan minivan, 17.1%
2. Chrysler 300 sedan, 13.3%
3. Genesis G70 sedan, 11.2%
4. Mitsubishi Eclipse Cross SUV, 9.1%
5. Mitsubishi Outlander SUV, 9.1%
6. Dodge Journey SUV, 8.9%
7. Ram 1500 Classic pickup, 8.3%
8. Mitsubishi Mirage G4 subcompact, 8.0%
9. Buick Encore SUV, 7.6%
10. Mitsubishi Mirage subcompact, 6.9%
Newest of the used
These are the top models bought and resold within their first year.
1. Mercedes-Benz C-Class compact, 12.4%
2. BMW 3 Series compact, 11.8%
3. Land Rover Discovery Sport SUV, 11.8%
4. Land Rover Range Rover Evoque SUV, 10.9%
5. Mini Clubman subcompact, 10.7%
6. BMW X1 SUV, 10.4%
7. BMW X3 SUV, 9.0%
8. Nissan Versa Note subcompact, 9.0%
9. Jaguar XF sedan, 8.8%
10. Nissan Versa subcompact, 8.7%
Look for leftovers
You might be able to find never-sold 2019s, some identical to the “new” 2020 versions on sale now. According to a new analysis for AARP by iSeeCars.com, 1.9 percent of all vehicles remaining at dealerships are 2019 models. But some models have a greater supply of leftover 2019s, so it might be worth beating the bushes to find if they meet your needs.
The Dodge Grand Caravan and Journey are being discontinued. 2019 models of the Genesis G70, Ram 1500 Classic and Buick Encore, which have 2021 versions in showrooms now, are considered two years old, which can trigger increased incentives from automakers.
Explore quick turnovers
Only 3.4 percent of cars bought new are sold within the first year, according to iSeeCars. But some, often luxury models, get dumped at much higher rates, in one case as many as 1 of every 8 sold.
The original owner takes the big hit on depreciation, and you get a shot at a nearly new vehicle. Some companies give dealers incentives to buy such cars, use them as service loaners, then sell them again even before they become the previous year's models — mainly Mercedes-Benz and BMW, according to iSeeCars. The company considered those unrepresentative and tried to weed them out of its statistics. To you, they're still nearly new vehicles and potentially worth considering.
You should ask why a car so new is becoming a trade-in. You'll find lots of reasons. Sometimes owners decide they really weren't the vehicles that they had expected. Or they got a foretaste of iffy reliability and learned quickly about high service costs. Sometimes, for those who can afford such impulses, buyers just want the newest shiny thing.
Make a switch
When your preferred vehicle isn't available at a price you want to pay, look for alternatives, ones you didn't have on your original list. The point is to wind up with something similar to what you wanted but that you can find in greater supply on dealer lots.
Sometimes that's another vehicle from the same brand. Other times it's a direct competitor. It might even be a similar type of vehicle but a different size.
TrueCar researchers found these examples of how its users were looking at substitutions: Those who wanted a Kia Telluride considered a Toyota Highlander, Kia Sorento or Ford Explorer. If they were looking for a Toyota Tacoma, they also looked at a Ford Ranger or Ford F-150. Potential Toyota RAV4 owners widened their scope to a Honda CR-V, Mazda CX-5 or Subaru Outback.