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One of the best car shopping weekends before the pandemic is harder these days.
Amid the manufacturing challenges of the auto industry due to persistent supply chain issues, Memorial Day sales are generally minimal or non-existent this year.
“It sounds pretty bleak, to be simple,” said Ivan Drury, Edmunds ’senior director of Insights. “It’s getting harder and harder for people to get a new car with the features they want at the price they’re willing to pay.”
The average amount paid for a new car is more than $ 45,200, up 18.7% from a year ago, according to a joint forecast from JD Power and LMC Automotive. Buyers pay about $ 700 above the average sticker price, Drury said.
At the same time, the average incentive offered by distributors has fallen to an all-time low of $ 1,034, compared to $ 2,996 a year ago, according to JD Power / LMC forecast. In general, dealers do not need to offer many incentives to sell cars these days.
In fact, while sales are down 23.8% from a year ago due to reduced inventory, the average profit per car at dealerships is $ 5,046 more than $ 2,733 ago. one year.
It is becoming increasingly difficult for people to get a new car with the features they want at the price they are willing to pay.
Ivan Drury
senior director of insights at Edmunds
“This high level of earnings per unit is more than offsetting the drop in sales volume,” Thomas King, chairman of JD Power’s data and analytics division, said in the forecast.
Meanwhile, in the face of limited inventory for a new vehicle, a growing proportion of buyers are heading to used car lots, Drury said.
“You see a lot of new cars [dealer] Websites that are labeled “coming soon” or “in transit” are already sold, “Drury said.” So unless you can order this vehicle and wait three or six months, you’ll end up in a used car. “
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Of the swapped buyers, 45 percent end up with a used car compared to 35 percent a year ago, Drury said.
Of course, there is little relief in the used car market. Average prices have risen 22.7% in the last 12 months, according to the latest data from the Bureau of Labor Statistics. The transaction averages $ 29,948, according to Edmunds’ research.
However, this means that the exchange values are also higher.
“For your own used vehicle, you get multiple budgets,” Drury said. “Take advantage of this.”
Another thing to keep in mind is the cost of financing. The average rate paid for new car loans is rising. It reached 4.7% in April, up from 4.5% in March and 4.1% in December, according to Edmunds. With the Federal Reserve expected to continue raising a key interest rate that affects consumer lending, car buyers are likely to face higher rates in the coming months.
However, well-qualified buyers can get a decent price, depending on the car.
“You can still get zero or maybe 1.9% funding,” Drury said.
For used cars, the average rate is 8%. However, for certified used vehicles, which have generally passed a rigorous inspection and include an extended warranty, you can find special financing offers.
“It could be 1.9% or 2.9% or even a cash refund,” Drury said.
And while these used cars may cost more, you can pay a higher interest rate on a loan for an unsecured version.
“Even if you save money up front with a non-certified used car, you may end up paying more overall,” Drury said.