Matt Degen is an editor at Kelley Blue Book, a website that helps consumers research and purchase used and new vehicles.
Global supply-chain problems have reduced the inventory of new vehicles, resulting in long waits to buy a car. When will things get back to normal? None of us has a crystal ball, but our analysts think that toward the end of the year some of these supply constraints will have eased. And we’re already seeing that, as inventory levels are rising very, very slowly. It’s baby steps toward some normalcy, though it may be a new normal. Because automakers have been selling cars even with leaner inventory, I think a lot of them are realizing that they don’t need to make as many cars.
Is there any hope for those who are in the market for a new car now? Yes. It’s not as if all the car lots are empty. There are new and used cars to buy. You just may not get the exact car you want in terms of the color and features. Some automakers are letting customers configure the car they want on their website. After that, they work with the dealer to purchase the car. But the process of manufacturing and shipping the car could take several months.
If you need a car right now, look for a less popular smaller car, such as a sedan or a hatchback. SUVs, trucks and minivans are still in short supply. I know buying a small car isn’t feasible for those who need a bigger family vehicle. But if you just need some good transportation, you should have better luck finding those types of cars.
If you find a car that’s available, can you negotiate on price? Traditionally, dealers expected customers to negotiate. Customers would go to a site such as www.kbb.com, look up the manufacturer’s suggested retail price and negotiate from there. However, in today’s environment, buyers can expect to pay the sticker price, or more. We’re not seeing many deals because dealers don’t need to offer you one. If they don’t sell a car to you, they’ll sell it to the next person in line.
Buyers can still try negotiating on financing terms. We at Kelley Blue Book have always encouraged people to get preapproved for a loan from their bank or credit union. That way, they can go into the dealership with financing lined up and use that as a negotiation tool. The dealership may offer better financing, and that will save you money.
What about used cars? We suggest looking for a certified preowned vehicle, meaning it has been checked for damages and repaired and, more importantly, comes with a warranty. Financing terms are negotiable for used cars, too. If you’re looking for a particular car, new or used, that’s not available in your area, you may be able to work with an out-of-state dealer. There are transport services that can bring the car to you, and the dealership can handle those details and help with any sales tax issues.
In light of the high cost of both used and new cars, does it make sense to repair your existing car to keep limping along? The general rule of thumb is that if the repairs cost what the car is worth or more, it’s probably time to look for a new car. But even if the repair is less than that, it may not be the smartest move. If you’re on the fence about certain repairs, have a mechanic look the car over. It might cost you, say, $150, but a good mechanic can let you know about your car’s current problems and potential problems in the future.
Rivan joined Kiplinger on Leap Day 2016 as a reporter for Kiplinger's Personal Finance magazine. She's now a staff writer for the magazine and helps produce content for Kiplinger.com. A Michigan native, she graduated from the University of Michigan in 2014 and from there freelanced as a local copy editor and proofreader, and served as a research assistant to a local Detroit journalist. Her work has been featured in the Ann Arbor Observer and Sage Business Researcher.