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Being in the market for a new car right now is challenging, to say the least.
Over the long Labor Day weekend, transaction prices remain high. While the three-day stretch is typically marked when dealerships organize large sales events to clear out their lots and make room for next year’s models, low inventory and strong consumer demand mean that the cars are sold out. Requires less incentive to sell.
“It’s a tough environment,” said Kelsey Mays, assistant managing editor at Cars.com. “I don’t think it’s a surprise to shoppers, but that doesn’t make the situation any easier.”
On-going global shortages of microchips – key components needed to operate today’s autos – have hit manufacturers’ production of new vehicles, which has translated into increased demand. The result is low discounts being offered across the board, some autos selling for more than the sticker price, and expanding demand in the used car market.
According to research by JD Power and LMC Automotive, dealership inventory is about a third of what it was pre-pandemic. The average time a new vehicle sits on a dealer lot before it is sold is an estimated 26 days – the first time on record of less than 30 days. Two years ago – before the pandemic – it was 62 days.
According to J.D. Power, the average price paid for a new car is $41,378. The average discount – if offered – is about 4.3% of the sticker price. This is less than half of what it was a year ago.
Switching to the used-car market also couldn’t provide much relief. According to auto-research firm Edmunds.com, the average price for a used vehicle is $27,272. This is 25% higher than the average price a year ago.
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Still, if you’re in the market for a new car and hoping to get a good deal, all hope is not lost.
For starters, if you have a trade-in, spillover demand for used cars may cause the price to exceed your estimate. Even vehicles with higher mileage are getting more: According to data from Edmunds, the average amount paid for autos with mileage between 100,000 and 109,999 rose 31% in June to $16,489 from a year earlier. was $12,626.
So although you may be unable to reduce the price of your new car, it is possible to score more for your trade-in.
And although the discounts aren’t as generous or extensive as they have been during the past Labor Day weekend, there are some specials that might be worth a second look even if they’re not for your favorite model or brand.
“There are few cars with decent inventory and reasonable incentives,” Mace said.
For example, according to Cars.com, several versions of the 2021 Chevrolet Equinox come with $3,000 off, or 7% to 11% off the price. Accounting for that discount, the price will be around $24,500 to $43,000, depending on the trim. That offer expires on 30 September.
Similarly, the 2021 Buick Enclave’s manufacturer discount of $4,250 will result in a price tag of around $37,000 to $59,500, depending on specifications.
If you’re struggling to find something suitable nearby, it’s worth expanding your search, Mace said. Some buyers — about a third — are willing to look within 100 miles for the car they want.
Additionally, you can consider leasing.
“It may be the cheapest way to get into a new vehicle,” said Evan Drury, Insight’s senior manager for Edmunds.
Although leases typically come with restrictions on mileage and you may charge for excessive wear and tear, they typically only last a few years. So if you don’t love the car, at least you’re not in debt for five or six years, Durie said.
Also, if you see something you want, don’t wait too long to pursue it.
“If you wait around… you’ll be missed,” Durie said. “We’re seeing a lot of cars flying by.”
Data from Edmunds shows that roughly a third of vehicles are sold within a week of hitting dealerships. Many are even selling within the same day of delivery.
“This lack of new cars is not expected to be fixed anytime soon,” Durie said.