Just five years ago, asking whether or not buying a new vs used car was a good financial investment would be a no-brainer. These days, things aren't so simple. From massive supply chain issues, to absolutely wild resale prices on used vehicles, many of us are turning to the new vehicle sales market for a better deal.
First of all, let’s talk about the buying experience. For many of us, the thought of negotiating with anyone at a car dealership is truly the stuff of nightmares. But despite the fact that dealership lots are looking a little spooky these days, the average dealership experience has changed pretty significantly. While you still may not have what we would call a "delightful" experience, you may actually get a better deal on a vehicle if you go the dealership route vs used these days (more on that horrifying stat later).
That being said, there are new challenges, especially since supply chain issues as a result of the pandemic has left inventories pretty much empty and you’ll probably be asked to order the car from the factory. It can take up to a year for your built-to-spec vehicle to show up on the lot. Unfortunately, these are the new standard waitlist times you can expect across virtually all dealers.
Some particularly optimistic sales teams may try to woo you with estimates of three or four months, but that’s often a tactic to get you on their order list or poach you away from one you may already be on. A year or more wait for most new vehicles is the new norm if you're picky about what you want.
That being said, there are some ways to make the experience a little smoother:
- 1. Patience is Key. If you know you're extra picky about what you want, it’s important to decide what you want, and stick to it (assuming you don’t need that new car right now). If you’re looking for something really specific, getting on a waitlist early is your best chance of getting that new car sooner.
- 2. Do Your Homework: In this market, skipping your homework is going to get you more than a bad grade; it could mean you end up trapped with something you regret 5 years down the road. Make sure you’re aware of what is on the market, and research all the options and supply available before even talking to the dealership. Tools like CoPilot or cars.com are a couple helpful sources for doing your research ahead of time and walking into the dealership armed with all the information you need.
- 3. Be Prepared to Act: This may seem counterintuitive given our first point, but the key is to decide what you want, wait until it’s available, but act fast as soon as it is. Making sure you know exactly what you’re willing to live with, whether that’s on features, price, or vehicle type, is the key to mastering this one. While there are waiting lists at most dealerships, there are occasional mishaps or shipments that could mean you're called up with an option to get something sooner than anticipated. Being ready to act fast will mean more time behind the wheel of your new car!
- 4. Always Call Ahead: Before visiting your local dealership do some research to figure out if they even have any inventory available. If they’re out of what you’re looking for, sourcing from dealerships a little farther away from you gives you a larger pool to choose from and a higher chance of finding what you’re looking for. Check with all the dealerships within driving distance before giving up hope!
Trust us - the dealerships don't like being out of inventory any more than you do. S automakers are pping and selling cars and trucks without the ordered options on purpose to get more inventory out the door.
This could mean that before you sign on the dotted line for that shiny pickup truck, the dealer may mention to you that what you get - even though the VIN matches the truck you ordered - might not have all the options you’re about to pay for.
While this could seem a little suspicious, this may be the the fastest way they can get you into the vehicle you ordered, so consider whether or not this is something you're ok with.
For almost every upgrade or custom option you ask for, chances are it’s something electronic within the car, and for each one of those electronic options, more chips are needed.
Unfortunately, these semiconductor chips are the main reason behind supply chain issues across the board, which is why some automakers are electing to sell you that truck without blind-spot detection and a phone charger, but will enable those options for you later on down the road, once the chip supply has levelled out. While this may not be ideal in the short term, it could be a good option if you need your vehicle now, but want to have these more modern features long-term.
You may think that looking into an EV might help you skip the line, being it’s the newest technology in the automotive landscape, but this ends up being a dead end as well. EV interest has skyrocketed thanks to fuel prices, and there are more buyers in the space than ever before. In 2022, Tesla saw its first slip in new vehicle registrations, while the rest of the non-Tesla market saw an increase of over 70%. As mentioned before, chip supply is still an issue and it affects EVs even more than traditional vehicles. Being a new technology that’s filled to the brim with even more tech means that many more chips need to be allocated for these cars to function. Their adoption rate may still not be anywhere near cars that burn dinosaur juice, but their availability is hindered by how long it takes them to get off the production line.
So, getting on a list and waiting a year isn’t your thing? Totally understandable. There are still plenty of used cars out there, most of which are certified from an OEM dealer, but the availability isn’t the issue here: it’s the pricing.
According to Consumer Reports, the average retail price of a used vehicle right now is over $29,000. While new vehicles are unavailable for a year or more, prices on cars you can buy and drive away in the same day have absolutely skyrocketed across almost all makes and models.
To give you an example of the crazy world we’re living in, here’s what the market is like if you’re looking for a new versus a used Toyota RAV4 Hybrid XSE AWD in Canada:
Financing a 2023 from a Toyota dealer would cost you $50,026.23 (taxes, freight, PDI and all that jazz included) at 7.39% APR. The least expensive used 2022 (at time of writing) is from a Honda dealer with about 7,000 kms on the odometer and would run you $60,999 (taxes and other fun fees not included) at 7.99% APR. Autotrader informs us that this is a “Fair Price” and only $259 above market value!
This may very well be the first time in history where you could purchase a brand-new vehicle, drive it around for a few years, rack up some miles, and then go to any dealer to get more than what you initially paid for it. With the used car market on its head like this, many dealers have shifted focus to mainly dealing with previously enjoyed vehicles, making OEM dealer lots look a little bizarre, as they’re filled with makes they don’t normally sell in varying model years.
If you're set on jumping into the car buying market right now, whether you're looking at a new or used vehicle there are a few things you should know to hopefully save a lot of hassle down the line:
Doing a little bit of research on cars that are less thought of could end up with you scoring a great deal. While second-hand Corollas and Civics are far from a deal these days, looking at more domestic or niche makes and models that are usually passed over because of preconceived reliability or fuel mileage issues are usually not nearly as bad as their stereotypes. Bonus points if you can score something that falls into the luxury segment, as it could come loaded with options that weren’t initially on your radar. Some of these outliers have tight-knit communities or cult followings as well, which makes ownership easier in the reliability and parts department, while making the experience a little more special.
Given the rising fuel prices these days, makes and models that don’t cost much in fuel and maintenance over their lifetime are the leaders in inflated value. Because of their reliability, anything Toyota or Honda is up in price, and if they happen to be a hybrid model, you can expect that price tag to climb even higher. Surprisingly, minivans are also enjoying insane resale value! Most new options now are too expensive, plus fewer automakers are opting to make them now, which allows budget vans like the Dodge Caravan to sell for around $30,000, even though some are closing in on 10 years old.
While the added security of buying from a dealership that provides a certified multi-point inspection is attractive, the hair-raising prices tend to outweigh whatever else they can throw in to sweeten the deal. Better deals can be had from private sellers with more reasonable asking prices. Those who try to mirror the prices the dealers are advertising see their vehicles sit around on classified sites longer and longer. There’s also the opportunity to haggle on price with someone a few towns over, where dealers are more firm because of the market price and demand on certain models.
We know you’re looking at getting out of your current car for a reason, but is it really all that bad given the current market? A service on the car to keep it going for a few more years, even if it ends up being a couple thousand dollars, is less than what you’d be overpaying for something that won’t hold that value in the same amount of time. Even if you own a desired model that a dealer is offering you the deal of a lifetime on to bring in for them to resell, if they don’t have something on the lot you’d really like to get into, you’re left stuck on a waitlist like everyone else or doom-scrolling used ads to see if a deal comes along. Same deal if you’re looking to use your current steed as a trade-in on something new - if your new car comes in a year from now, but the market has changed by then, that $9,000 trade-in value could look more like $5,000 when the time comes. At the end of the day, if it gets you from point A to point B safely, even if it’s just for another year, it could be in your best interest to hang onto what you’ve got.
Whenever you do manage to drive that car into your garage, remember that damage to that vehicle is a huge buzzkill after all it took to get it there. The last thing you need is to be taking the car you just got your hands on into the shop for repairs, or losing some resale value from the trade-in that’s supposed to make your new car payments digestible.
Protecting every surface of your car may sound complicated, but it’s a lot easier than you might think, and is becoming more popular as vehicle prices and repairs have skyrocketed. Plus, it’ll save you a ton of money in the long term if you take the time to protect it from day 1. There are lots of options out there for every driver, but we’ve summarized the most popular ones for you here.
If you can only choose one thing to protect, remember that the one repair that’s most likely to keep you off the road for an extended period of time is your windshield. Many windshield supply chains are suffering the same long wait times that new vehicles are, with some owners waiting as much as 6 months for a new windshield! Protecting your windshield is key during a market like this. For more on that, check out this post which will help you decide which windshield protection film technology is best for you.
Whatever decision you choose to make, just remember that it's tough out there, and patience is key!
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