If you’re getting ready to head to the dealerships to look at new or used cars, you have to be more prepared than ever. Not only will you have the usual time of spending hours test driving vehicles, but haggling on a price is also now harder than ever. With demand for cars up and availability low, dealerships have the upper hand. Because of this, many cars are being sold for more than they are actually worth or valued at, even despite age, mileage, or history. This year, car buying is just a bit trickier, and if you aren’t attentive, you may be paying too much for your next vehicle.
New cars are selling for over MSRP at dealerships right now
This isn’t just a theory that buyers have made us feel paranoid, even major consumer journals are reporting on the trend. This includes publications like The Wall Street Journal, which has noted that this change in prices to above original MSRP is being driven by high consumer demand and lack of product. In the past year alone, the automotive market, as well as many other major industries around the world, suffered major shutdowns.
At the time, we could only guess how these changes would affect the auto market, but many of us did not assume that it would jump back to life with such gusto. So much so, in fact, that the demand for cars has outgrown manufacturer’s ability to produce.
“The sticker price on cars isn’t sticking. In some cases, it’s going up.”Nora Naughton, The Wallstreet Journal
Even used cars are selling for over sticker price
The market for used cars is in just as rough of a condition. While it’s currently an excellent time to sell your vehicle, being in the position to buy a vehicle seems to be the lower hand. Even used cars are being sold at dealerships at prices well over what is referred to as “book price,” or the estimated price of sale based on age, condition, and mileage of a used vehicle. Just like new cars, used cars are in high demand, with not enough on the market to keep up with sales. With less pressure to sell, used car dealerships are able to sell vehicles for over sticker price, and there isn’t much consumers can do except wait for the market to become more stable.
What is causing the spike in prices and lack of inventory?
If you haven’t been keeping up with automotive news as of late, a global chip shortage is responsible for the slow production of many vehicles. This has left many cars complete and waiting for the last crucial piece before they can be distributed to buyers. It’s gotten so bad that there are parking lots of vehicles waiting just for chips — parking lots so big and full of vehicles like these 2021 Ford Super Duty trucks you can see from space. The chip shortage doesn’t seem to be getting better any time soon.