Consumers are paying highest prices ever.
Washington DC (KM) – There’s a nationwide shortage of new and used cars, and consumers are paying the highest prices ever. That’s according to AAA Mid-Atlantic. Ragina Ali, Manager of Public and Governmental Affairs, says the chip shortage is one reason for the lack of new cars on the market. “We know that, according to Cox Automotive Insights, at the end of last year, there was a two-million shortfall compared to in 2019 of new car inventories,”: she says.
The auto club says the average transaction price new cars jumped almost 15% last to almost $45,000.
And used cars are also scarce. “That’s primarily because rental car companies that sold off their fleets during the pandemic. They’re now looking to replenish those fleets and basically only having used cars as an option,” says Ali.
She also says more people are holding on their cars longer than in past years.
AAA says these supply chain issues causing the price to skyrocket is expected to be with us well into 2022. But it’s too early to determine if this trend will still be around in 2023
In the meantime, the Auto Club says if you’re planning on buying a newer car this year, you need to negotiate when possible. “Consumers may have less choice of a specific vehicle or model, but not necessarily less power to negotiate,” says Ali. “Remember that you want to negotiate the cost of the car, the finance rate, the trade in value, all off those things, and you want to keep those transactions and negotiations separate from the other.”
Ali says another tip is sticking to your budget. “The purchase of a car is a business decision, not an emotional decision,” she says. “You want to make sure you’re getting the car you want to have, especially at the prices that they are right now. And don’t be persuaded by the salesperson. You want to get what you want to have,” says Ali.
Another tip is to buy our your lease. “If the lease is expected to expire in the next six month, chances are the residual value you will pay for ownership is significantly less than the replacement value. So if you’re leasing a vehicle, that may be an option as well,” says Ali.
But one of the best options, according to AAA, is to keep your old vehicle for a little longer. “We certainly can’t predict future pricing with any certainty,” Ali say.. “But in most cases, it is less expensive to maintain or repair your current vehicle than actually negotiating the purchase of a new or even a used vehicle right now.”
By Kevin McManus