- New car inventory is low thanks to manufacturing and supply shortages -- most popular models have waitlists of weeks or even months.
- Low inventory and high demand means prices have gone up a lot.
- Depending on your situation, it may be better to hang on to your current car and try to wait out the market.
Buying a new car has always been a chore, but it's even worse right now.
Not 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 wasn't anything to be done except a complete overhaul of the transmission.
The price tag? Around $5,000.
Now, I have a healthy emergency fund. But even so, a $5,000 car repair bill on a car worth maybe twice that made me pause.
Upon reflection, it occurred to me that I could spend five grand repairing my old car -- or I could buy a new one. Five grand would make a nice down payment, and surely I'd get something for my old car as a trade-in.
Decision made, I spent the next few weeks searching for a new car. I browsed the maker sites for the right model, wandered the dealer lots, and even had a few serious conversations with some sales folk.
And after all that -- I gave up and decided to repair my old car. Here's why.
Inventory is sparse
The first major hurdle I found to buying a new car was just getting my hands on one. Inventory shortages are extensive, and the car lots that had been packed to the brim just a year ago are now housing a handful of cars at most.
What's more, 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 more -- to get your hands on popular hybrid models and their gas-powered equivalents.
The lack of inventory means there are waitlists. Very long waitlists. My local dealer told me it would probably take at least six weeks to get the car I wanted on the lot.
The dealer didn't even have a similar model on the lot I could look at or test drive, so I'd be going on blind faith that I picked the right car. Plus, the only way to get on the waitlist was to give them a cash down payment -- which I was told was maybe refundable if it turned out I didn't like the car when it arrived. Maybe.
I could potentially get a car faster -- if I were willing to drive 300 miles to another dealer with better inventory. But even that move would only shave a couple weeks off the process. (And involve an overnight hotel stay and hours of driving.)
My other option was to go with an entirely different model or manufacturer, something less popular that they had on the lot. But that had its own problem: the price.
Deals are sparser
When inventory is short and demand is high, the inevitable result is high prices. For the first time in ages, it is definitely a seller's market right now in the new car industry. And dealerships are taking 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 the manufacturer considers fair for the vehicle. In the bygone days of full-to-bursting car lots, it wasn't hard to get a car at MSRP -- or even less.
These days? Not so much.
During my search, the lowest prices I found were several grand above MSRP. The highest? More than $10,000 on top of it.
And that was before looking at the ridiculous fees for "add-ons" that nobody needed or asked for. One dealership was charging four grand for some nebulous "dealer package" that included tinted windows, floor mats -- and some undefined "premium sales service." What even is that?!
Hurry up and wait… to overpay me
When all was said and done, a new car with a reasonable MSRP around $25,000 would have cost me $35,000 or more. The monthly payment on that car loan would have been way outside my budget, which also has to cover auto insurance.
And that's after I waited at least six weeks for it to arrive before I could even test drive it. I'd already wasted several weeks on my fruitless search for a new car. I didn't have another six weeks -- or more -- to wait for a car to arrive. I also wasn't going to plunk down an extra 30% over the car's value just to drive it off the lot.
Instead, I headed back to my mechanic and humbly asked for that new transmission. I even managed to use some fancy financing in my favor. The combination of a 0% intro APR card and a nice sign-up bonus means I won't have to deplete my emergency fund to cover the repair.
I still want a new car. Repair or no repair, this car isn't getting any younger. And our other family car, however reliable it may be, is old enough to vote. At a certain point, upgrading is simply going to be a matter of need instead of choice.
But, hopefully, that won't be anytime soon. As manufacturing ramps back up and supply lines are repaired, ideally, the car lots will fill up, too. Either way, after this experience, it's going to be some time before I dare venture onto a new car lot again.
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