Successful Car Shopping During the Automotive Limited Inventory Supply in Bremerton, WA

Mike Columbus's Blog | Successful Car Shopping During the Automotive Limited Inventory Supply

It’s a challenging time to be a car buyer.  If you've been by a new car dealership lately, you may have noticed that there are fewer cars on the lot. It's not your imagination: there are continuing interruptions in global supply chains, causing auto plant closures and shortages of popular vehicles, and it will be some time before new-car inventories are back to normal.

The biggest contributor to the problem is a global shortage of microchips. They are critical for everything from car engines to infotainment systems. Advanced driver-assistance and safety technologies require more processing horsepower and more complex microchips.

Microchips are also used in every other consumer electronic device, and the car industry has to compete for a limited supply of chips. As the COVID-19 pandemic outbreak accelerated a year ago, auto production quickly ground to a halt and automakers canceled orders for microchips. 

Unfortunately, the chip shortage isn't the only supply issue automakers are facing. The unexpected Texas deep freeze led to interruptions in the petrochemical industry that supplies seat foam to automotive interior suppliers. The blockage of the Suez Canal in March stopped components destined for European automakers that serve the U.S. market. There's even a shortage of shipping containers in Asia that affects automotive suppliers' ability to get parts to car factories.

Global automakers operate using just-in-time manufacturing processes. Instead of having warehouses full of parts ready to be assembled into finished automobiles, they rely on suppliers to deliver the parts to plants right before they are installed on new cars rolling down the assembly line. Some parts are in the plants just hours before they are fitted to a vehicle. If there is an interruption anywhere along the supply line, the final assembly plant grinds to a halt.

Should You Buy a New Car Right Now?

Yes, and here is why. Right now, is the best chance to get the car, the trim level, and color that you want.  As the spring season progresses, it looks like supplies of popular models will be limited. The longer that you wait, the higher the price you will have to pay and the longer the delay in getting a car you order.

Although manufacturer incentives are not as plentiful as they have been in the past, there are some models that continue to be discounted. The average incentive amount is $3,527, down from $4,415 in March 2020 and $3,789 in March 2019, according to estimates from J.D. Power and LMC Automotive.

Right now, for example, Chevrolet, is offering deals on the 2021 Equinox that range from $3,500 to $6,500 for most versions through May 3. After the discount, the price would be anywhere from $21,000 to $38,000. The new Jeep Renegade comes with a factory discount of $2,000 to $6,000, putting the price you would pay between $20,000 and $33,000.

“It’s a seller’s market, not a buyer’s market,” says Kelsey Mays, senior consumer affairs editor for Cars.com. “And sellers don’t have that much to sell.”  However, while the chip shortage is expected to impact production through the end of the summer or early fall, not all automakers — or specific models — have been affected equally. This is a good time to explore other brands.  At the West Hills Autoplex in Bremerton, Washington, I have access to 15 different brands and the ability to offer all manufacture incentives.

There has been no other time when it is essential that the consumer is working with a true automotive sales professional.  The consumer needs to make sure that they are getting the best deal possible.  Do not assume there is no additional wiggle room in the price. Work with a sales professional that is a buyer’s agent in all aspects of the deal.

Should You Buy a Used Car Right Now?

Not everyone in the market for a vehicle can wait for a plentiful supply of new vehicles.  The good news is that used cars today are better than ever before.  Cox Automotive Senior Economist Charlie Chesbrough says, “Quality is at an all-time peak.”

There is an ample supply of quality pre-owned vehicles that have all the bells and whistles consumers are looking for including things like a navigation system, Bluetooth, Apple Car Play and Android Auto.

Find a dealership has a strong commitment to the used car market.  Chuck Haselwood founder of the West Hills AutoPlex in Bremerton, Washington first opened a used car dealership, known as Chuck & Buds.  The duo offered a 30-day warranty on their vehicles – something unheard of at the time. They built their business on putting the customer first above everything else.  Chuck’s vision of the autoplex was to create a one-of-a-kind customer experience based on his long-standing business values of always doing the right thing.  Today, I offer the same customer experience by putting the customer first in everything, and always doing the right thing.

Should You Trade-In Your Current Car?

The high demand for used autos means your existing car may be more valuable. The average amount for a trade-in is about $17,000, according to data from Edmunds. The average age of those cars is about 5.5 years. The same factors that put dealers in a strong position negotiating the price of the car you want to buy will work in your favor when negotiating your trade-in value. Make sure that your salesperson shows you the true market value of your trade-in.

Going Forward with Optimism

The auto industry has had its ups and downs. We have lived through them and have come out better than before. The consumer will always win because manufactures will build what they want and desire.

Regardless of whether you’re considering a new car or a pre-owned one, it’s worth looking beyond just dealerships close to your home. The bigger the radius of your search, the more options you’ll have.

There are also other ways to bring down the cost of your purchase. Depending on your credit score, you may be able to find a 0% financing deal on a new car. Otherwise, the average interest rate paid on a new-car loan is about 4.5%, according to Edmunds. For used cars, it’s 8.1%.

Be aware that the longer you stretch out your loan — say, for 72 or 84 months (six or seven years) — to afford the monthly payments, the more you’ll pay in interest (unless it’s 0%) and the greater the chance that you’ll end up trading it for a new car before you’ve paid it off.

 

Keys to Success:

  • Right now, is the best chance to get the car, the trim level, and color that you want.
  • Remember that some models still have discounts.
  • Do not assume there is no additional wiggle room in the price.
  • Find an automotive sales professional that works as a “buyer’s agent”.
  • Find a dealership with a strong commitment to the used car market.
  • The high demand for used autos means your existing car may be more valuable.
  • Make sure your salesperson shows you the true market value of your trade-in.
  • Look beyond just dealerships close to your home.
  • You may be able to find a 0% financing deal on a new car.
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