Are you looking to purchase a vehicle in today's market? Are you afraid of the rising costs of vehicles as well as the "market adjustments" you keep seeing at all the dealerships? If you are like many others out there, between looking at the slim options available at many car dealers along with rising prices, you may be inclined to want to "wait it out." I am here to explain what is going on currently in the automotive industry, and why you shouldn't be afraid to purchase your next vehicle now! I will be going over topics like the following:
- Current Market Conditions / Stabilization
- Market Adjustments
- Preowned Vehicle Market
- Vehicle Ordering
The current market conditions are a direct result of the Covid-19 pandemic. Between shutdowns, individuals getting sick, and business closures, the Covid-19 pandemic has directly impacted the automotive industry. Automotive manufacturers have only been able to produce a fraction of the vehicles they were able to when everything was "normal" due to Covid-19 plaguing the world, lack of vehicle parts / microchip shortages due to the shutdowns, and more. As such, when manufacturers drastically reduced or stopped production of their vehicles, vehicle transportation company employees were forced to find other work. Now that manufacturers have slowly begun to increase production, many dealerships are having issues getting their vehicles because there aren't enough vehicle transporters. The demand for vehicles is not going away, which is why to this very day, most automotive dealerships have very little or no new vehicle inventory. Experts within the automotive industry anticipate the inventory to finally stabilize sometime in 2024. Even then though, do not expect to have the overflow of vehicles we saw pre-pandemic.
In just a few short years, technology has continued to increase within the automotive industry. Between E-technology, improvements with interior comforts, safety equipment and more, the cost of new vehicles is continuing to rise. Therefore, on average, a vehicle you purchased in 2018 more than likely now comes with more base equipment from the manufacturer and starts with an increased base price of three to five thousand dollars more than a 2018 model. Furthermore, with the continued effects of the Covid-19 pandemic, automotive manufacturers are more consistently adjusting their "sticker price." The price you see on a vehicle's window sticker, is the "Manufacturer's Suggested Retail Price" or MSRP. As the market continues to change, so is the suggested retail pricing from manufacturers as well as a dealership's right to adjust the pricing accordingly for their specific market (addendums/premiums). If you decided to "wait it out" you can be waiting years and you could very well cost yourself even more money than if you purchased today!
Preowned vehicle values have continued to rise steadily throughout the pandemic. As new vehicle inventory declined, the value of preowned vehicles has risen. The increase is around 30% currently, and if you have a vehicle trade, that can very well "balance out" the increase in new vehicle costs if you are looking to upgrade. If you are currently leasing a vehicle, many dealerships will even be willing to purchase your vehicle from the bank (if the bank allows) and share some of the positive equity with you towards your next vehicle purchase! Many individuals are utilizing this method to "stabilize" their own deals. It certainly is worth looking into if you have a current lease of vehicle trade.
Another positive to the lack of inventory, is your ability to custom order your next vehicle! Most manufacturers are charging premiums (market adjustments) on in-stock inventory that is currently on their lots that you can drive home today. They are charging this adjustment due to the supply versus demand, their lack of ability to sell the volume that they used to sell vehicles at, and the need to continue to keep the lights in the dealerships on. If you buy a vehicle off a dealership's lot, more than likely there will be some sort of market adjustment. Many dealerships are offering their vehicles at MSRP if you order, because it doesn't take away from their inventory on the lot. Therefore, you are getting your vehicle exactly the way you want it, for a better price, if you are willing to wait for it to be built. Lastly, with the ever-adjusting MSRP increases, it's better to get your order in or purchase your next vehicle sooner than later!
