Monday, June 28, 2021

Consider Carpooling, Uber/Lyft, or Rentals Instead of Buying Until Car Prices Drop

New and used car prices have spiked and, in my opinion, peaked because of the surge in demand related to the Covid virus and the precipitous drop in auto inventories due to the microchip shortage. It’s almost certain, that new and used car prices will plummet in the 4th quarter of 2021, about the time the 2022 new models arrive. If you don’t need to buy a new or used car, you should wait.

But even if you think you need to buy another car, but are a low-mileage driver, you should reconsider. Eighty percent of Americans drive an average of less than 40 miles per day. Many older Americans drive far less than that. I have many retired customers who drive less than 5,000 miles per year (14 miles per day).

There are many others in the same boat as you that may be interested in carpooling; or you can hire an Uber or Lyft whenever you need transportation. I live 12 miles from my place of work, and I can “Uber” there for $12. If you don’t need a car every day, “Uber” to Publix, Walgreens, or the mall. If you do use your car most days, rent a car for about $45 per day. If you rented a car for 3 months, about the time when car prices will return to normal, it would cost you about $3,500. Rental car prices are also a lot higher today, but still a better option than buying today.

The money you’d spend is far less than the money you’ll save by buying your next new or used car in October or November. Plus, you can sell your present car, no matter how bad a shape it’s in, for a lot more than it’ll be worth in the fourth quarter of 2021. There’s even a “kicker” if you’re buying a new car. Today, you’d be buying a new 2021 which is almost a year old when you buy it. In the fourth quarter you’re buying a “brand-spanking-new” 2022. You’re saving thousands of dollars in depreciation. When you trade that car in 4 years later, the dealer or other buyer doesn’t know or care that that you bought that 2021 brand new. All they care about is that it’s “one model year older” than a 2022. Your trade-in allowance will be thousands less.

My fellow car dealers hate me for writing articles like this. Educated consumers who read this will postpone their purchase and cost car dealers (and me) sales. But, despite what other car dealers might think, I’m not stupid. I learned a long time ago that smart businesses look at their long run success, often at the expense of the short run. Telling your customer the truth about when it’s a good or bad time or to buy their next car is, not only the right thing to do, but far better for your long run success.

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