Why You Should Buy A New Car During the Pandemic
The more that Covid-19 shuts down commerce and travel, the more that it is affecting car sales. If you are in the market for a new ride, this may help you wheel and deal. With just a little homework, you can have the upper hand in negotiations.
The Problem for Dealerships
In the second quarter, U.S. new vehicle purchases and leases were down by almost 2 million in overall year-to-year sales. Car companies saw a drop in sales from a low of 18 percent to a high of 34 percent, depending on the brand.
The final figure was 6,379,293 million in 2020. That may sound like a lot, but in 2019, during the same period of time, 8,300,726 million were sold. This includes fleet sales which dropped off to a tiny percentage of what they normally were.
At the same time, trade-ins were at a low. People aren’t buying new cars and aren’t giving up their old ones. Working remotely is allowing many to put off replacing an old car. For others, they can’t trade their old car because they are facing financial problems due to COVID. All of this is tightening the used car market drastically.
For once, dealerships have more incentive to reduce prices on new cars than they do to make used cars more affordable. A new Lexus or other luxury ride may be more competitive than normal against so-called bargain brands.
The Good News for Consumers
While there was some rebound in the summer, dealerships will be living up to their names and making deals to move certain vehicles in their inventory. They will also be looking for your trade-in to bolster their used car lots. This could put you in the driver’s seat when it comes to making a deal, but only if you buy new.
There are some exceptions to these declines. In particular, the 2020 Jeep Gladiator, which is the brand’s first truck in many years, saw its sales rise dramatically, especially when compared with other midsize pickups. Likewise, the new Ford Bronco did well while other SUVs stayed on lots, regardless of brand.
So armed with this knowledge, what should your strategy be? Once you narrow down the type of car, SUV or truck you want, you can compare sales rates. You can zero in on the car brand that has had difficulty moving a certain product that has a good reputation with reviewers. That will help you negotiate a better deal. You know they need to move the product, and you expect a discount to take it off their hands.
Before going to the dealer, you determine what you want and at what price you want it. If you have good credit, you may be able to make an offer and drive away saving many thousands. This is essential since every thousand on the loan increases the amount you’ll pay in interest.
However, don’t walk in the door ready to make an offer. Take a test drive. Get a trade-in value on your vehicle. Get it in writing. At the next dealership, do the same. In fact, you may want to go to at least three dealerships to get the most for your trade. This will be your second line of attack. You are going to ask the max for your trade.
Now you have a baseline amount for your current car. You could see if you could sell it for more in the free want ads on Facebook. Maybe give yourself a deadline of one month to make more money on it. The minute you sell it, you can go back to your favorite dealership that offered you the best deal and ask for that price.
Of course, if you can’t sell it, you go back and don’t take no for an answer. Your trade-in won’t have decreased in value in a week or a month. In fact, you can argue that this market is seeing used car values increase as the supply diminishes. Then you haggle for a better deal on the exact ride you want.
If you are secure financially, this is the best time to act. The economy will rebound, and dealerships will benefit almost immediately. Customers will rush in to trade cars at the end of the pandemic, and dealers will again charge a premium for the most popular models.