Monday, March 30, 2020
Economic Threat to Auto Industry
“No idea or behavior shift has ever spread more quickly or completely in the history of the planet. In seven weeks, the life of every single person on Earth changed, and the unfolding tragedy and the long slog forward will drive expectations for years. Expectations about being part of a physical community, about the role of government and about what we hope for our future.”
I copied and pasted this introductory paragraph from a blogger I follow religiously…Seth Godin. His words on the Coronavirus describe these times perfectly.
When I woke up this morning, before I had my coffee, I had an eerie feeling…” maybe this is a bad dream!” I know this is an old cliché, but if there was ever a time when it fits perfectly, it’s today. We’ve all had bad dreams that, during the dream, we wondered if this is a dream…usually that’s when you wake up. I’m pretty sure I’m not dreaming.
I’ve mixed emotions about writing on the Coronavirus/COVID-19. This blog/column is entitled “Earl on Cars” and maybe I should be explaining how you can avoid paying too much for your next car. On the other hand, all human beings on our Planet are thinking or talking about survival…physically and/or economically. Today, a car can be important to both your physical and economic wellbeing; so, I’ll advise you on how to buy or lease one during the Corona Crisis and get, not just a good price, but probably the best deal ever on a new or used car.
Auto manufacturers and dealers are as desperate as you. When this crisis passes, there will far fewer auto manufacturers and dealers than today. I’m a car dealer who sells a very popular make of car, Toyota, and my business stinks. Most manufacturers and car dealers aren’t as fortunate as I, and many with less popular makes won’t survive. Sensing this, car dealers and manufacturers will do whatever they can to outsell their competition, if they want to be among the “survivors”.
If you’re a regular reader of mine, you’ve heard me say, “Competition is your friend”. One thing all auto manufacturers have in common is being fiercely competitive. GM must outsell Ford, Toyota must outsell Honda, Mercedes must outsell BMW, etc. Expect the biggest discounts and rebates as well as lowest interest rates and payments. Today is not the time to rush out and buy or lease a car. Time is on your side as the COVID-19 pandemic peaks. Current predictions point to the end of April. Now is a good time to begin your homework…due diligence. Study Consumer Reports to decide exactly what year-make-model vehicle you want to buy. Once you do that, put out some price “feelers” online. Shopping online, you can expand your radius as far as you want to. If you want to buy a Cadillac, you can shop 3 or 4 dealers or 30 or 40! Time is on your side because you won’t be making buying decision until the end of April. This gives you time to “separate the wheat from the chaff”. Some dealers won’t satisfy your demand for an out-the-door price which includes ALL charges including dealer fees, dealer installed accessories, and tax and tag. An out-the-door price is the number you can write on your check, present it to the dealer, and drive the car home. Once you have at least 3 out-the-door prices on the exact year-make-model vehicle, you’re ready to strike at the end of April…the optimum time to buy a car.
On Thursday April 30, contact your “finalists” (at least 3) and let them know you’re going to buy your car from the dealer that reduces his price to you by the most. Reemphasize that their price must be final, out-the-door. At even the mere “hint” of a shenanigan, you’ll vanish, and they’ll never see or hear from you again.
My regular readers know that you should arrange your own financing with your bank or credit union. The only exception is low interest financing offered by the manufacturer. If you have a trade-in, you should have already shopped its value with Carvana, www.WeBuyAnyCar.com, CarMax, and AutoNation. Also, get bids from the used car departments of dealers that sell the same make of car as you’re trade-in.
If you follow these guidelines, I strongly believe that you will get the best deal on your next new or used car that you ever had; but let me close with one big caveat. You’re getting a great deal because car dealers and auto manufacturers are desperate. Desperation inspires both giving you a great discount or tricking you into believing you’re getting a great price when it’s not. Caveat Emptor/Buyer Beware. Good luck, and stay safe.