By: Denny Jacob
After moving to Statesboro, Ga., at the beginning of the year for a position at Georgia Southern University, Brittany Hewitt decided to push off her search for a car in order to focus on furnishing her apartment. She figured she could wait until March and then pick her search efforts back up.
Ten months have passed and Hewitt hasn’t been able to find the type of car she’s looking for. But she’s planning to keep looking and has her family and boyfriend assisting her by keeping an eye on the market in Atlanta.
“I’m hoping that if I hold out just a wee bit longer, I can find what I need,” said Hewitt, 29, a pre-law advisor.
Hewitt is one of the countless individuals struggling to find a car – new or used – due to the constraints brought on by the COVID-19 pandemic that are weighing on the automotive industry.
Shopping for a new car in the current climate is going to be a challenging task for anyone. It isn’t impossible, but consumers must recognize that a significant shift is taking place in the industry. It starts with changing expectations about the process.
When the pandemic hit and concerns about the virus resulted in global stay-at-home orders and restricted operations across most industries, auto manufacturers scaled back production on the assumption that demand for vehicles would be low until conditions improved.
But a whirlwind of converging factors – a stronger economic recovery, low interest rates, government stimulus payments – caught automakers by surprise. As auto manufacturers jumped to meet demand, higher demand for consumer electronics that use the same semiconductor chips that are crucial to car production was also soaring. A shortage of semiconductors mixed with increasing pressure on global supply chains has left auto manufacturers unable to meet consumer demand.
Dealers are dealing with historically low inventory at the moment. There were fewer than 1 million new vehicles for sales in the United States at the end of September, according to Kelly Blue Book, compared to 2.5 million one year ago and 3.5 million two years ago.
Because of low inventory and high demand from consumers, the usual negotiating strategies won’t help. The best thing consumers should know ahead of time is to know what the maximum they’re willing to spend as many potential buyers are willing to pay the above manufacturer’s suggested retail price (MSRP) right now.
“There aren’t going to be any negotiations here. There aren’t going to be any discounts. So you need to go in with the proper expectations,” said Nicholas A. Ibello, a certified financial planner at Williams Asset Management.
While the landscape has changed drastically, some universal considerations still apply. Ibello says consumers still need to consider factors like the interest rate, APR, how much they’re willing to put down and the monthly car payment they can afford if they’re not buying the vehicle outright.
The unprecedented shortage also means consumers must be willing to go above and beyond in ways they wouldn’t have had to in the past. They should expand their search radius to 150 miles, especially if they’re in a rural area. They will also need to be flexible and be willing to make concessions on certain aspects as finding a vehicle that fits every single one of their needs will be a challenge. Additionally, they should be prepared – meaning they’ve got all the paperwork necessary to walk out with the car they intend to purchase that same day.
“There’s really no time anymore to go home and consider it and come back. This market is so hot and so tight that you’ve got to move quickly,” said Jenni Newman, editor in chief of Cars.com.
One of the easiest things they can do is continue to wait out the market. This is especially true if consumers simply want a new vehicle rather than actually need it. Many in the industry don’t expect the shortage of cars to abate until at least next year, so consumers may be better off waiting for this issue to get better with time.
“If you can wait, just go ahead and do it,” said Ivan Drury, senior manager of insights at Edmunds.com.
This is the route that Hewitt is taking. Although she has a mental deadline of having a new car by next March, she noted that she would probably just go without a new car until she found one she liked.
“I am hoping that it just kind of falls out of the sky all pretty like here is your vehicle, Brittany. Because I’m really tired of looking,” said Hewitt.