Before Covid, almost all new cars were bought from dealers’ inventories. There are many reasons for this and most of them are because the manufacturers and the dealers know they can sell more new cars faster and at higher prices when they sell them to you from the dealers’ on-the-ground inventory. Purchasing a new car is an exciting, important, and emotional time in your life. When you enter a car dealer’s showroom and see, touch, and smell those shiny, beautiful machines, your logical mind “takes a back seat” to your emotional mind. Clearly, making the second largest purchase of most people lives is not something that should be done impulsively.
There’s another reason that buying a new car from a dealer’s inventory makes no sense. Very rarely does a car dealer have the exact year-make-model with the exact options, accessories, or interior/exterior color that the buyer wants. Most buyers end up with a compromise on the exact vehicle they would like to drive for the next 5 years or longer. It’s impossible for a car dealer to keep enough cars in inventory to meet all the combinations of year, color, interiors, options, and models. The average price of a new car today is about $48,000! Isn’t something that expensive worth waiting for? If you order that perfect car for you, you’ll be driving exactly what you want.
There are many other decisions that you make when you buy a new car quickly from a dealer’s inventory that you probably don’t spend enough time and research on. These are the financing, extended warranties, maintenance plans, GAP insurance and other “products/services” all dealers will push on you after you buy your car. When you order your new car, you have plenty of time to shop for the best interest rate with banks and credit unions and decide if you need extended warranties or maintenance plans and, if so, what’s a fair price?
Arguably, the biggest reason you shouldn’t buy a new car from a dealer’s inventory today is because you’ll pay a much higher price. You already know that car prices are higher than ever before, thousands higher than just 2 years ago. Dealers have always known that they can make a lot more money when they can deliver that new car ASAP, preferably the same day you walk into the dealership. During the covid caused microchip shortage creating the huge supply and demand imbalance, this is truer than ever before. When you let it be known that you want to order your new car from the manufacturer, the salesman will do everything in his power to discourage you and talk you into buying one from his very small inventory. He may also exaggerate how long it will take for the car to arrive. He knows how much you’ll want to have that new car ASAP. Verify the delivery time by checking with other car dealers that you must check with for the best price.
Your next step is to locate the Costco certified dealers for the make car you’re buying. If you’re not a member of Costco, you can purchase an annual membership for $65. Costco requires their certified auto dealers to sell Costco members a new car at a lower price than they sell that car to any other buyer. When you order your new car from the Costco dealer, be sure to make it part of your purchase contract that the price you pay is the Costco price for that car when it arrives in the dealership for you to take delivery. Depending on how long it takes your new car to arrive, you’ll save thousands of dollars over what you’d pay today for a car that wasn’t even exactly what your wanted to buy. New car prices are coming down slowly and will continue to drop over the next few months. You’ll be asked for a deposit. It’s in your best interest to agree to a deposit because the dealer may be tempted to sell your car to someone when it arrives for a lot more money than you contracted for. A deposit makes your purchase more legally binding on the dealership (and on you).
If you’re someone who must buy a car because you don’t have one, or the one you’re driving needs repair, you have a financial question to answer. Can you make do with transportation during the time it’ll take your new car to arrive for less cost than you’ll be saving? Your options are public transportation, car-pooling, Uber/Lyft, renting a car, or fixing your current car so that it can be safely driven. If you currently lease, you can usually get an extension for a few months. You can rent a car for as little as $800 per month. If you have a good mechanic you can trust, he can often make a car safe to drive for far less than he’d normally charge when you explain your dilemma.