There’s an old saying about the stock market…” You can never buy at the bottom or sell at the top.” This is because nobody, not even the experts, can predict the absolute tops and bottoms of markets But, if you’re careful, you can predict the best “approximate” time to buy or sell. This same truism holds for buying a car in a seller’s market, where demand exceeds supply.
I’m somewhat of an expert on the auto market because I’ve been a car dealer for more than a half a century, since 1968. I’ve seen a lot of “peaks and valleys”. This current, unprecedented rise in prices peaked about a month ago. Prices are still very high, although they are slowly coming down and will continue to decline for up to six months. If you’re thinking about buying, be prepared to pay more than you’ll pay next month or the month…probably $1,000 to $2,000 more. By June, you’ll save $3,000 to $4,000.
If you must buy today, you’ll have to accept a target price of close to MSRP. I spoke to a woman last week whose current vehicle had been totaled in a car accident, but her insurance company paid her a very good price to replace it. She had to buy a car and I sold her one from my dealership for MSRP, out-the-door plus sales tax and license plate. That’s about $2,000-$3,00 more that I would have sold her the same car in 2 or 3 months. Most dealers are still charging thousands of dollars over MSRP, using addendum labels, hidden fees, and dealer installed accessories. You can read a mystery shopping report that I conducted last week on a large, South Florida Toyota dealership that refused to sell a new Toyota Corolla for MSRP, asking $1,300 above by clicking on this link www.MSRPTooLow.com.
Here are some pointers to guide you through this high, stormy new car market:
- If you must buy a car soon, wait until Saturday, New Year’s Day, 1-1-22 or the Sunday and Monday immediately after. The first 3 or 4 days of January, in the new year is when auto manufacturers and car dealers push to “hit their numbers”. They close their books to sales after 3-4 days of the previous year. The motivation to manufacturers and dealers to sell cars peaks every year on these few days. Prices plummet briefly, relative to prices from the previous year. Auto execs want 2021 to look as good as possible to their board of directors, stockholders, and Wall Street. Car dealers feel the same way, especially the public traded ones like AutoNation. You should have done your due diligence/homework in the weeks before to choose the right car and dealership. The more flexible you are on color, model, trim, and accessories you are, the lower the price you’ll get. Be prepared for a very limited inventory of stock cars, or those in-transit to choose from.
- Utilize www.CostcoAuto.com. After the first of 2022, the slow downward trend in prices will continue. Consider ordering the exact car you want…color, options, make and model. If you’re not already a Costco member, pay the $65 annual membership fee and contract to buy your car from a Costco Certified Dealer. Stipulate on the official vehicle buyer’s order that the price you pay the dealer will be the Costco member’s price at the time your ordered car arrives at the dealership. Costco certified dealers are contractually obligated to sell you the car at a lower price than they’ve sold that model to any other customer for.
- Pay no more than MSRP, if you must buy your car at a different time than suggested in items (1) and (2). This may take some searching and flexibility on model, color, and options, but there are a few dealers out there will, reluctantly, sell you a new car near MSRP. The best way to encourage them to do so is by shopping the best out-the-door price you get from one dealer with his closest competitor for the same make. This is much less time-consuming if you do it online. In your communication with each dealer, be sure to define out-the-door price as the price you can write the check out for to buy the car plus state sales tax and license plate. In other words, nothing added to the price except government fees. The test of government fee is that there’s no sales tax charged for a true government fee.