Is Now a Bad Time to Buy a New or Used Car?

Are you in need of a vehicle? You have probably heard of the supply chain problems caused by the COVID-19 pandemic, which has created a shortage of vehicles available to new and used car dealerships and consumers. Even if you don’t completely understand the ins and outs of the shortage, it may cause you to wonder: is now a bad time to buy a new or used car? We’ve got some advice on how to proceed.

First, let’s talk about why there’s a shortage. During the pandemic, automotive and semiconductor chip production plants faced a shutdown. This led to a global chip shortage, creating a lack of vehicles available. Production is ramping up again now, but the impact on the auto industry is significant. Why? It’s because computer chips are important to car electronics, used in radio, A/C, brakes, navigation systems, airbags, and more. The more extensive and sophisticated the features in a car, the more chips are required. Therefore, a semiconductor chip shortage has caused problems for automobile manufactures, which has led to issues for anyone running a new car dealership.

If you’re looking for a new car, you’ll have to think carefully about price, features, inventory, and loan rates. These are always important factors, but they’re especially so right now. The production of cars continues to be limited, which is compounding the car shortage. Once restrictions began to be lifted and people wanted to get out and about, the existing supply of both new and used cars was quickly depleted by eager customers. Dealers began to have trouble restocking their inventory quickly enough to keep up with the demand.

What does this mean for consumers? With the shortages, you might not find the car you want to buy. If you do, some of the features you want may not be available in new model year vehicles. Heated seats and steering wheels, for example, are being eliminated in GMC vehicles. Wireless smartphone charging spots are another casualty of the chip shortage in some models, and satellite navigation functionality may be limited. Fortunately, many of these features can be added post-market, at some point in the future.

Even with limited features, sticker prices are climbing. Going to a new car dealership and negotiating for a lower price is nearly impossible, because all makes and models of cars are impacted by the same shortages. The good news is that interest rates are historically low right now, which means that even with a higher price, you may still be able to get financing that results in affordable monthly payments. That fact alone makes it a good time to go ahead and buy a new or used car. Because the Federal Reserve is looking at raising interest rates this year, perhaps several times, smart buyers should jump on the low rates of this moment if interested in securing an auto loan.

What about used cars? Used car dealerships don’t rely on automotive factories for their inventory, so are they still lacking? Sadly, yes. New car shortages have placed pressure on the used car market, as well. Prices are up across the board, so if you’re looking for a used car, you’ll need to take your time and do some shopping to find the best deal. It is important to note, though, that while used car prices have gone up, they have not increased as much as new car prices and are still somewhat tied to MSRP. There is some good news for consumers about the used car market. If you have a trade-in, it’s likely to be valued at a higher price than it would have netted you in the past. Trading in a used car is a good way to knock down the expense of the vehicle you’re purchasing, which is especially helpful right now.

What’s the best thing to do, in the current climate? If you need a car right now, it doesn’t really matter whether or not this is the perfect time to buy. You’ll have to do your homework and take your time, researching your options before you make a decision. It’s wise to be as flexible as possible about the model and features you want, including trim levels, colors, and other options. If you can do without the most in-demand models and features, you are likely to find a vehicle that’s not marked up as significantly as some other models. You might also want to look in a larger geographical area than you normally would, to find a lower price.

Another way to lock in a lower price is to pre-order your vehicle. This is becoming a popular option, allowing buyers to reserve vehicles that aren’t currently in stock. When you pre-order a new vehicle, you can specify which features you do and do not want, so that you can trim the price a little bit in that way as well. If you don’t need a car immediately and are willing to wait several months to take possession of your vehicle, this may be the way to go.

Regardless of how the car market is behaving, if you need a car you need to find a car dealership that’s reliable, honest, and customer-focused. At Dixie Buick GMC, we’ve been serving the community of Fort Myers, Florida since 1934. With an extensive online inventory and welcoming showroom, we work with customers to help them find the right new or used vehicle to meet their needs and fit their budgets. Buying a car can be an overwhelming experience because there are so many factors to consider, but we’re here for you, from the trade in process, through working with your credit, to providing excellent service, performed by certified factory-trained technicians, after you’ve purchased your vehicle. To learn more about what our award-winning sales and service team can do for you, visit our showroom, browse vehicles on our website, give us a call at 239-330-9918, or contact us online.