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When it comes to shopping for a new car, this isn’t your typical Black Friday.
Deals and discounts that were once plentiful this time of year are harder to come by. An ongoing global shortage of microchips — key components needed for today’s autos to operate — continues to impede manufacturers’ production of new vehicles, which has translated into demand outpacing supply.
“In any other year, you’d be able to find deals,” said Jennifer Newman, editor in chief of Cars.com. “This year, it’s going to be limited.”
The supply imbalance has pushed the average price paid for a new vehicle to about $44,000, according to the most recent estimate from J.D. Power and LMC Automotive. That’s 19.3% higher than October 2020, when transaction prices averaged $36,887.
Consumer demand also has spilled into the used-car market, pushing up values there, as well. For vehicles that are 1 year to 3 years old, the average price is $38,974, a 46% jump from $26,627 two years ago, according to car-shopping app CoPilot.
Part of the reason for record transaction prices is that automakers have slashed their incentives because, generally speaking, they don’t need to offer big discounts to sell cars right now.
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The average manufacturer discount is $1,628, a record low, according to the J.D. Power/LMC estimate. That’s a drop of $1,871 from $3,499 a year ago, and the first time on record when it’s been below 4% of the average sticker price.
While the deals are few and far between, there are some that are noteworthy, according to Cars.com. That includes a factory discount of $1,250 to $4,000 on the 2021 Jeep Renegade (depending on location and vehicle specifics), which starts at just under $25,000. The 2021 Buick Enclave, which starts at roughly $40,000, comes with a $3,750 discount. Both deals expire on Nov. 30.
Despite ongoing inventory shortages, 63% of in-market shoppers say they plan to purchase a new car by year’s end, according to a survey done by Cars.com.
If you’re among them, be prepared for there being little wiggle room on the price of the car, said Ivan Drury, senior manager of insights at Edmunds.com. Buyers are often paying more than sticker price.
However, you may be able to negotiate on the value assigned to a car you’re trading in.
“Your current car is your biggest bargaining chip,” Drury said. “Dealers want your trade-in.”
Additionally, you may be able to land a decent financing deal, he said. Some manufacturers are still offering 0% financing (or close to it) for certain makes or models for the most creditworthy consumers. Otherwise, the average interest rate for an auto loan is about 4%, according to Experian.
And if you do find something you like, it may be wise to act quickly. For the first half of November, 1 in 20 new vehicles sold the same day they hit the dealer lot, according to Edmunds. Nearly a third sold within the first week and almost half within the first two weeks.
On the other hand, if you’re not finding what you really want and you have some flexibility in the timing of your purchase, it may be worth ordering your car instead of buying off the lot.
“You can get the exact vehicle you want,” said Newman, of Cars.com. “You just might have to wait a while.”
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