Maybe you waltzed into a car dealership looking for a new car in the past year — and the dealer didn’t have any. Maybe you went online seeking out a used truck and were shocked by the price.
You aren’t alone. Shopping for a vehicle in 2022 is more expensive and difficult than most experts say they have ever seen.
“This is not going to be like the last time you bought a car when you are going to get a discount and all of these things,” said Ronald Montoya, a senior editor at automotive resource website Edmunds.com.
Due to the global microchip shortage, manufacturers have been limited during the last year in how many new cars they can produce. Since it has been hard for people to get their hands on new cars, the value of used cars also rose.
According to Edmunds, the average monthly payment for new vehicles purchased in the first quarter of this year is expected to be more than 12% higher than the same time last year, and the average payment for used vehicles is expected to be more than 24% higher than a year ago. New and used car prices typically increase about 2% a year.
Chuck Prescott wanted to save himself the headache of trying to find a vehicle for one of his daughters on his own. He enlisted Bob Dittel, of Car Buyer’s Advocate in Apple Valley, to help with the search and buying process.
“It is horrible right now — not that it is any fun ever to buy a used car,” Prescott said as he watched his daughter Talin examine a Honda Fit with Dittel at a used car lot in Crystal.
Prescott ended up buying the vehicle.
Here are some tips to buyers for navigating a market that heavily favors sellers:
Mentally prepare yourself to compromise
In the not-so-distant past, because buyers could haggle with dealers over prices. Just know that buyers don’t have much negotiation power right now.
“Most people are paying over sticker [price] so you need to sort of have that mental readjustment of what is considered to be a good deal,” Montoya said.
Paying the MSRP, or “Manufacturer’s Suggested Retail Price,” may even be a good deal at the moment. Some dealerships are making buyers pay for dealer-installed accessories, such as tinted windows. More places are charging “market adjustment” fees that can add $3,000 to $4,000 or more for high-demand vehicles, Montoya said.
Ask the dealer for an “out-the-door price” that takes in the markups, fees and taxes above the car’s price. If it’s more than you can pay, get ready to walk.
But if you find something you like for a fair price, don’t wait.
“You have to be able to recognize a good deal and be able to act on it quickly,” Montoya said. “It will be sold the next day if you don’t make a decision.”
Start shopping early
Normally, many serious car buyers would purchase a car two to three weeks after they started their research, but now it may take shoppers at least two to three months or longer to find what they are looking for, said Steve Whitaker, owner of Whitaker Buick GMC in Forest Lake and immediate past chair of the Minnesota Automobile Dealers Association.
“I think the big message is that if you are looking for a vehicle whether it is new or used the important thing is to be patient and to start ahead of time,” he said.
In regard to financing, you can check your own bank or credit union and see how that compares to what the dealer can obtain for you. With interest rates rising, it’s best to lock in a fixed rate for whatever length of time fits your monthly payment needs.
Be flexible and open-minded
People usually have a particular color or make and model in mind when they look for a car, but the more flexible they are, the easier it will be to find something, said Bob Dittel, owner of Car Buyer’s Advocate. Dittel charges a flat rate to find cars for customers and helps them as they examine the car in person and negotiate the purchase with dealers. Oftentimes, clients will name a brand they like and Dittel will look for those make and models as well as suggest other comparable brands with similar attributes.
If people are open to cars not having certain features like heated seats, many of those bells and whistles can be added more cheaply by auto shops, Dittel said.
Right now SUVs are in high demand, so some customers might want to consider buying a sedan, Montoya said.
Trade-ins are valuable
If you have a used car you don’t want anymore, it is the perfect time to sell or trade it in because your vehicle could be worth more than you may have thought. The inventory issues can work in the favor of sellers and those trading in vehicles as used cars are worth more than they were just a couple years ago and if in good condition they can fetch similar prices to when they were originally purchased.
Like many dealerships, Whitaker Buick GMC is reaching out to customers to possibly sell their cars. There aren’t as many rental returns being sold by rental car agencies. People leasing their cars have ended up buying them. Even the auctions that dealers rely on are experiencing tight supply, Whitaker said.
“I’ve been in the business 40 years and I have never seen it like this. … All of this activity has made the prices rise on used cars to the point that even dealers have a hard time sourcing used cars,” he said.
Shop around and get trade-in offers from several places.
Go to car shows
If you are like many people and want to see a model up close, try going to consumer shows so that you can see the car you would like in person. This year the Twin Cities Auto Show has returned to the Minnesota State Fairgrounds through May 22. Visitors will get to compare hundreds of vehicles side by side as well as test drive them. This year will also be the largest showcase of electric vehicles and electric technology in the show’s history.