Consumers looking to purchase a new vehicle ahead of the summer road trip season need to be prepared to do more research and be more flexible with their budget to get the car that they want. According to the car shopping experts at Edmunds, the percentage of consumers who paid above sticker price for a new vehicle climbed to 12.7% in April 2021, compared to 11% in March 2021 and 8.1% in April of 2020. This is the highest level that Edmunds has on record dating back to 2002. Edmunds analysts say that consumers are paying well above list price because of a combination of unique market factors: The global chip shortage is severely constraining the supply of new vehicles, and automakers and dealers are less pressured to discount vehicles since consumer demand remains incredibly high.
According to Edmunds data, new vehicle inventory on sale at dealerships nationwide was down by 48% at the end of April compared to a year ago: Inventory of trucks was down by 64%, SUVs by 44% and passenger cars by 42%.
“New vehicles — particularly new trucks and SUVs — are basically the 2021 equivalent of toilet paper and hand sanitizer a year ago,” said Jessica Caldwell, Edmunds’ executive director of insights. “Dealers and automakers are making good profits right now since consumers seem to be a bit more accustomed to paying more for goods in the past year, and new vehicles are no exception. Demand is staying strong as vaccinations ramp up across the country and Americans look to hit the open road in a new car, but as the chip shortage continues, there soon won’t be enough vehicles to meet consumer appetites.”
Since car shopping is a bit more tricky in the current market, the experts at Edmunds put together insider tips to help consumers looking to buy a vehicle:
- Be prepared to do more research and act quickly once you find what you want. As vehicles get harder to find, your best bet is to do as much preparation and research as you can from home before setting foot in a dealership. Look up deals that automakers might be offering on leases or financing. Use sites such as Edmunds to find inventory in your area and call to confirm that the car you want is available. And once you find what you want, be prepared to move quickly to make your purchase because there’s no guarantee that the vehicle will be available for long.
- Consider purchasing used. Although demand is going up in the used car market as well, there are far more options available there than you’ll find in the new market, and they’ll come at a more affordable price. If you’re concerned about the risks associated with buying used, a certified pre-owned vehicle might be a good compromise as it comes with a warranty and is generally newer with lower mileage.
- Expand your search radius. By expanding your online searches to include dealerships that are farther away, you have a better chance of finding the vehicle that you want. Some dealers will deliver your new vehicle to your door, so be sure to ask and you might be able to skip a big drive. If you expand your search to out-of-state, just be aware that you might have to pay additional taxes and fees.
- Maximize the value of your trade-in. Used car values are also at record highs right now, which means you could get more for your trade-in. Make sure to check the value of your vehicle so you know how much extra cash you’ll be working with toward your next purchase.
- Consider other vehicle categories. Trucks and SUVs are selling like hotcakes. If you’re comfortable with the idea of buying a passenger vehicle like a sedan instead, you might have better luck in finding more options.
- Determine if you really need to make a car purchase right now. If you’re working from home for the rest of the year or don’t require a vehicle to get around, you could take advantage of the hot market for used cars and sell your vehicle, but then hold off on making a new purchase until supply levels start returning to normal.
“At the rate we’re going, it’s going to be a lot tougher for car shoppers to find exactly what they want this summer, so doing extra research online before you even set foot in the dealership is highly recommended,” said Ivan Drury, Edmunds’ senior manager of insights. “You might pay above list price and drive a bit farther to get the car that you want, but if you know you’re going to need a new vehicle in the next few months, definitely pull the trigger now before this situation gets any worse.”