New cars come with high prices over MSRP, long waits, no guarantees; used cars could be better
CHICAGO (WLS) -- A new car may be one of the hottest commodities right now. In fact, one recent industry study shows that 80% of buyers paid above the MSRP or Manufacturer Suggested Retail Price.
Supply chain backups, a major microchip shortage, and COVID-19 factory shut downs are just some of the reasons why it's hard to find a new car these days.
"Some dealers would be straight up and say, we have nothing on the floor," said Kevin McGurn, who was looking to buy a car. "And there's some would say, I gotta tell you, put down a deposit and get in line."
When McGurn did find cars available he was told that prices are sky high.
"We're selling cars, about $17,000 over sticker. So I want you to know, I can sell it for that. People are willing to pay for that. So we are going to be selling and it was a car that wasn't on the lot," he said he was told. "I couldn't test drive. They wanted a deposit. I had no assurance that that was gonna really be for me."
The I-Team obtained an email from a car dealer to a potential buyer saying, "We can order one for you but the turnaround is about 6 months at this point...all 2023 vehicles of a certain model are going for $7,000 over sticker."
"A year and a half ago we had 200 cars triple parked in these spaces. Now, if you look, we have no cars here," said McGrath Evanston Subaru manager Jimmy Kottler.
Navigating challenges of stressful car market
Kottler said shoppers can find a vehicle if they order ahead of time and wait. But in order to save money, you should shop around, take extra time and don't be afraid to ask questions like "do you charge over the Manufacturer Suggested Retail Price?"
"Flat out call a dealership and they ask if they're charging a market adjustment price; they will tell you if they are," he said.
He also added that there are dealerships, including his, which are not charging over the MSRP.
A recent study from car shopping experts at Edmunds.com found eight out of 10 of car shoppers paid above sticker price for new vehicles in January, According to Edmunds, 82% of buyers paid above MSRP for new vehicle purchases in January. At the same time in 2021, only 2.8% of buyers paid above MSRP.
Ivan Drury, Senior manager of Insights at Edmunds.com, said you can use the vehicle you have for leverage.
"If you have a trade-in, know that the car market is super-hot, because as people are paying more for new cars, guess what? People pay more for used cars and have a trade-in, you might really want to shop around that value for that vehicle because that trade-in value is going to be worth quite a bit more than you ever expected," he said. "So you might actually be able to chip away a lot of that new car price."
And be flexible: Consider alternative vehicle types, brands and colors and be willing to compromise on features. Expand your search to a dealership in a city that may have a higher inventory. Fly there and drive back.
"Try to ask the dealer to throw in some extras, you know, they're usually going to try to sell you an extended warranty anyway, maybe some kind of tire and windshield protection, rustproofing you know, things like," advised Drury.
You can also save money if you just wait. Experts say the delays and price hikes should level off in the next six months to a year.
McGurn said he ended up finding a vehicle and not paying over the MSRP but he was frustrated with the process.
"They're really doing consumers a disservice and they're not building a loyal basis," he said.
Used car prices are up too, but you usually don't have to wait for them. If you're looking for a used car, you should compare prices to websites like Kelley Blue Book and Edmonds before you buy.
If buying used at a dealer, ask if they can throw in a warranty or free maintenance to make up for the higher cost.
