With a pandemic and economic shutdown, you should be able to get the deal of the century on cars now, right? Not so much surprisingly. Let’s look at both new and used vehicles.
Certainly the marketing is telling you there’s never been a better time to buy a new car, but they also told you that last year and will tell you again this summer and fall. Generally, we have not seen much movement in new car pricing. We have seen improvements in some lease and loan terms, but many of those come with strings (ie 0% on 2019 models only or you give up a nice rebate). Why are prices holding up during this economic mess? Mainly because the factories are all shut down. Detroit has announced they will start reopening plants in the later half of May. It will take at least a month from then before new shipments arrive at the dealerships. So the inventory a dealer has today is all he’s going to get until around July. On popular models, we’re already having trouble finding particular vehicles for clients. Does this mean it’s a bad time to buy a car? No, not at all. The deals are slightly improved from earlier in the year; they’re just not the steal a lot of people are expecting. I don’t anticipate material changes in the market until mid-summer when new production starts hitting the lots. Keep in mind also I’m talking in generalities here. There are some models that have materially bigger rebates in the last month or two. Suburbans and Tahoes come to mind, but that’s more of a function of the coming new body style than the pandemic. Speaking of that, the newly designed Suburban/Tahoe that was supposed to be here this summer is pushed back. No official timeline yet but we’re expecting 4th quarter now.
We have seen more pricing movement on used vehicles than new. Used cars have moved materially, but haven’t fallen off the table. According to the April 27th issue of Automotive News, used wholesale prices are down 10-12% in just a few weeks. Highline vehicles have dropped the most, particularly sedans (which have been the softest part of the market for some time now). Interestingly, used retail prices are only down 1%. Apparently a lot of dealers are not ready to face the new reality, but they’ll have to shortly. Our biggest issue with used vehicles is the flow of transactions has slowed tremendously. Of course retail sales are down which means wholesale transactions are down. Many auctions have temporarily closed and volumes were down over 75% (although they’re picking back up now). This means finding the particular vehicle that fits our client’s request has been a difficult process. However, we expect volumes to pick up materially over the next few weeks. In summary, there are some good deals out there, but not as good or as widespread as the hype would have you believe (shocking, I know).
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