80% of New Car Buyers Are Now Paying More Than Sticker Price Due to Shortages

Female with car salesperson and she thinks about buying the car.
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Planning to hit a car dealership soon to find and the perfect set of wheels? You better move quick. A shortage of new cars caused by supply-chain disruptions has created a run on available vehicles — so much so that eight in 10 car buyers are willing to pay above the sticker price to land the right one, according to a new report from Edmunds.

Learn: The 29 Biggest Car Mistakes That Will Cost You
See: What To Do If Your Car Is Repossessed

The report, published last week, found that buyers paid above the manufacturer’s suggested retail price (MSRP) in a record 82.2% of all new vehicle purchases in January. If you want to know how high that number is, consider this: In January 2021 only 2.8% of buyers paid above the MSRP, and in January 2020 only 0.3% did.

“The fact that an overwhelming majority of consumers are paying above sticker price would have been unthinkable even just a year ago,” said Jessica Caldwell, Edmunds’ executive director of insights. “This is in part driven by affluent consumers being willing to shell out more cash to get the vehicles that they want, but there’s also a vast population of individuals who are being forced to do so simply because they need transportation and have no other choice.”

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As previously reported by GOBankingRates, a combination of problems — from a shortage of microchips and raw materials to plant shutdowns and a lack of workers — has contributed to a mass shortage of vehicles that one industry researcher pegged at more than 7 million worldwide.

Cadillac buyers were particularly generous with their spending in January, having paid an average markup of $4,048. Next was Land Rover, with an average markup of $2,565, followed by Kia, with an average markup of $2,289. On the other end of the spectrum, Alfa Romeo topped the list of brands that buyers paid less than sticker price for, with an average discount of $3,421 in January.

Explore: Plan Ahead for These Supply Chain Issues That Will Affect Your Wallet in 2022
Related: How Are Big Businesses Reporting Record Profits When Inflation Is So High?

The smartest course of action is to hold off purchasing a vehicle until the market returns to normal, experts say. That’s not practical for consumers who need a new car right now, however. Ivan Drury, Edmunds’ senior manager of insights, offers the following tips to snag the best deal:

  • Be flexible in terms of the type, brand and color of vehicle to widen your available choices.
  • Expand your geographic search beyond your local market — especially if it has low inventory. Just make sure you lock in a deal before booking a flight to another market.
  • Negotiate other features if you’re stuck having to pay above the MSRP. For example, you might ask that the price include add-ons such as warranties, service contracts, protection packages or dealer-installed accessories.
  • Make sure you get the best possible trade-in value for your current vehicle to lower the final amount you have to pay. Shop around for appraisals and check price guides like Kelley Blue Book and Edmunds.com.
  • Move quickly to snag the car you want by contacting the dealer immediately and locking in the price.
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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
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