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.
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.”
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.
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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