As the vehicle shortage drags on, we are left with the questions:
- When will inventory stabilize and car prices drop?
- Should you wait to buy a car?
- What can you do if putting off a car purchase isn’t feasible?
2021 was an unusual year for the automotive industry, to say the least. While customer demand for new cars rebounded from the economic uncertainty of 2020, automakers found themselves unable to meet that demand because…..of semiconductor chip shortages and supply chain problems.
When will inventory stabilize and car prices drop?
According to a December 2021 report from analytics firm IHS Markit, U.S. inventory levels are at their lowest levels since the global financial crisis of the late 2000s, but the needle is moving in the right direction for vehicle production.
Another report, Automotive News report, consulting firm KPMG predicts a dramatic dip in used-vehicle prices will precede the stabilization of new-vehicle inventory. The firm reportedly expects used-car prices to drop 20%-30% sometime in the months after October 2022. While the expected drop will spell relief for shoppers who wait to buy a used car, it can be detrimental to those who financed a vehicle amid the currently inflated prices and need to trade it in.
Should you wait to buy a car?
Shoppers today must contend with a limited selection, dealership markups, little to no discounts, and a greater sense of urgency to move quickly on a deal.
Vehicles that make their way onto the lot are more likely to be marked up in price or stuffed with numerous dealer-installed accessories that achieve the same effect. You’ll also find that dealerships are much less likely to come down on price since they know there aren’t many other options available. It’s a textbook case of supply and demand.
What can you do if putting off a car purchase isn’t feasible?
If you’re in need of a car, we recommend casting your net out farther, as this will increase your options and not every dealership is marking up their vehicles. If you see one you like, be prepared to move quickly — it may not be there the next time.
Most banks and credit unions announced programs to both help current borrowers and give new borrowers peace of mind. Make sure to ask for them.
While dealerships aren’t likely to budge on price, car shoppers might have luck asking for bonus extended warranty coverage, free oil changes and the like.
Remember: There is a supply crunch. So if you have a car to sell or trade in, you are in possession of a highly in-demand asset that’s probably worth more than you think. Make the most of it! Before agreeing to a dealership’s trade-in offer, shop the vehicle around to ensure you’re getting a fair price.
Once you get that new or used vehicle, you’ll need car insurance. We’ve made that part easy! Get an auto quote from carriers such as Allstate, Nationwide, Liberty Mutual, Progressive and more. If you should have any questions, give one of Billy Davis Insurance Group agents a call 219-980-2886.