Make Ends Meet: A chaotic car market
LOUISVILLE, Ky. (WAVE) - Haggling over the price of a car is an American tradition. It used to be the most stressful part of car buying negotiations, but in today’s world of supply and demand issues, you are lucky if you can even find a car to negotiate over.
Like most of our world since the pandemic, it’s like nothing we’ve ever seen before. Spiking demand, manufacturing slowdowns, supply chain issues and soaring prices have made buying a car very expensive and possibly very stressful.
WAVE News has covered all the economic changes during the span of the pandemic. WAVE News Producer Dustin Weekley never thought much about it until the storyline found its way into his life.
“My car broke down in December,” Weekley shared. “I was hoping it would take maybe a week, and I would have to bum rides for maybe a week, but a week turned into three weeks, then that turned into a month.”
Weekley, like so many other Americans, needed to find a new car fast.
Nathan Hecht, founder and CEO of Rodo, an app that lets you buy or lease cars from local dealerships without leaving your home, stresses what we are seeing today is a textbook case of supply and demand.
“Even though vehicle manufacturers have their assembly lines up and running, there’s a shortage of semiconductor or computer components for those vehicles,” Hecht said. “It’s basically the dynamics of supply and demand where demand exceeds supply.”
Prices have also risen along with demand. The Labor Department shared in a study from January 2022 that this is the biggest increase in vehicle prices in nearly forty years.
“Finding a car in my price range was kind of hard,” Weekley said.
The COVID-19 pandemic prompted the temporary closure of many companies including scores of factories. Although most companies are up and running many at full capacity, the supplies that are needed may not be available.
“In general, there’s limited inventory, so there are many makes and models that consumers won’t necessarily find,” Hecht said. “You’re going to have to be a little bit more flexible than say a year or two ago.”
Weekley agrees stressing car buyers need to do their research first while also being flexible.
“I knew from all the stories that we ran that it would be hard to get a good deal, and that turned out to be true,” Weekley shared.
Weekley found not only was it hard to find a good deal it was hard to hold on to a deal if you did find it.
He found a car that checked a lot of the boxes on his wish list but lost it as quick as he found it.
Hecht points out online shopping for your automobile on sites like rodo.com may bring more choices and better deals.
“Maybe your local inventory has limited inventory, but maybe a dealer 100, 200, 300 miles away has inventory and they are still competitive,” Hecht explained.
Hecht also pointed out the same things working against you may work for you if you are selling or trading in your car.
Car prices have increased but so has what a car dealership may be willing to pay for your trade.
“Your used vehicle has a lot of value in it,” Hecht exclaimed. “There are many companies that will get pretty competitive to try and buy that trade from you.”
The most important question while shopping for a car online or on the lot is, “Do you really need a new car right now?”
The market at present is chaotic and may remain in this frenzy at least until the end of 2022, or longer.
“You should be patient and wait another few months as we start to bring in more vehicles to the market,” Hecht stressed. “Pricing will probably come down to some extent over the near term.”
With more shoppers now chasing fewer cars because of the COVID-19 pandemic here are a few things to keep in mind.
- Make sure your vehicle priorities are set.
- Be flexible. Remember there is a shortage in supply.
- Make sure your financing is in place.
- Have your down payment in hand.
- Your trade-in value has also increased, use it.
“I thought it would be a lot easier than it was,” Weekley stressed. “Communicate with the dealer. That’s something I didn’t do, and it made the situation much harder.”
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