Buying a new car has always been a hassle, but it’s even worse right now.
- New car inventory is low due to manufacturing and supply shortages – the most popular models have waiting lists of weeks or even months.
- Low inventory and high demand mean prices have gone up a lot.
- Depending on your situation, it may be best to keep your current car and try to wait out the market.
Not so long ago I was faced with a major dilemma. My car, which was barely seven years old, had a major breakdown. After a few attempts to fix it, my mechanic came to the conclusion that there was nothing to do except a complete overhaul of the transmission.
The price to pay ? About $5,000.
Now I have a healthy emergency fund. But even so, a $5,000 auto repair bill on a car worth perhaps twice it got me thinking.
After some thought, it occurred to me that I could spend five thousand dollars fixing my old car – or I could buy a new one. Five thousand would make a nice down payment, and I’d surely get Something for my old car in exchange.
Decision made, I spent the following weeks looking for a new car. I scoured manufacturer sites to find the right model, scoured dealer lots, and even had a few serious conversations with salespeople.
And after all that, I gave up and decided to fix my old car. Here’s why.
Inventory is sparse
The first major hurdle I encountered in buying a new car was getting my hands on it. Inventory shortages are significant, and car lots that were filled to the brim just a year ago are now home to a handful of cars at most.
Plus, the problem gets even worse if you’re looking for a hybrid or electric vehicle. Chip and battery shortages mean it can take twice as long – or longer – to get your hands on popular hybrid models and their petrol counterparts.
Lack of inventory means there are waiting lists. Very long waiting lists. My local dealer told me it would probably take at least six weeks to get the car I wanted on the lot.
The dealership didn’t even have a similar model in the field that I could look at or test drive, so I would blindly believe I had picked the right car. Also, the only way to get on the waitlist was to give them a cash deposit – which I was told was perhaps refundable if I didn’t like the car when it arrived. Maybe.
I could potentially get a car faster – if I was willing to drive 300 miles to another dealership with better inventory. But even that decision would only shorten the process by a few weeks. (And involve a night in a hotel and hours of driving.)
My other option was to go with an entirely different model or manufacturer, something less popular than they had in the field. But that had its own problem: the price.
Offers are rarer
When stocks are short and demand is high, the inevitable result is high prices. For the first time in ages, it’s definitely a seller’s market right now in the new auto industry. And the dealers take full advantage of it.
When a new car leaves the manufacturer, it comes with an MSRP or Manufacturer’s Suggested Retail Price. This is the price that the manufacturer considers fair for the vehicle. Back when car lots were packed, it wasn’t hard to get a car at MSRP – or even less.
These days? Not really.
During my research, the lowest prices I found were several thousand above MSRP. The highest? Over $10,000 more.
And that was before looking at the ridiculous fees for “add-ons” that no one needed or asked for. A dealer was charging four thousand dollars for a nebulous “dealer package” that included tinted windows, floor mats – and undefined “premium sales service”. What is that ?!
Hurry up and wait…to overpay me
In the end, a new car with a reasonable MSRP of around $25,000 would have cost me $35,000 or more. The monthly payment for this car loan would have been well outside my budget, which also has to cover car insurance.
And it’s after waiting at least six weeks for it to arrive before you can even try it. I had already lost several weeks in my fruitless search for a new car. I did not yet have six weeks – or more – to wait for a car to arrive. Nor was I going to spend 30% more than the value of the car just to make it stand out.
Instead, I went back to my mechanic and humbly requested this new transmission. I even managed to use some fancy financing in my favor. The combination of a 0% introductory APR card and a nice sign-up bonus means I won’t have to deplete my emergency fund to cover the repair.
I always want a new car. Repair or no repair, this car is not getting any younger. And our other family car, reliable as it is, is old enough to vote. At some point, upgrading will simply be a matter of need instead of choice.
But, hopefully, it won’t be anytime soon. As manufacturing ramps resume and supply lines are repaired, ideally car lots will fill up as well. Anyway, after this experience, it will take me some time before I dare to venture again on a new batch of cars.
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