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- The COVID-19 pandemic didn’t tank the used car market like many thought it would.
- Currently, used car demand is strong because new car inventory is down.
- It’s still possible to get a good deal; you just have to act fast and be flexible and patient.
- Visit Business Insider’s homepage for more stories.
Just because there’s the ongoing COVID-19 pandemic to worry about, it doesn’t also mean you have to hit pause on all aspects of your life. Perhaps you’re thinking about buying a car this summer.
Business Insider spoke with Tom McParland, who runs a service called Automatch Consulting that helps people buy cars, about some advice.
As he writes for the automotive site, Jalopnik, McParland warned that this year’s Fourth of July car deals might not be as great as people expect because of low inventory, cheap financing being walked back and how the used-car market crash everyone was expecting didn’t actually wind up happening.
While it’s true that inventory for new cars is low — due to manufacturer closures and other factors — the used car market didn’t suffer nearly as badly as predicted, even with rental car companies such as Hertz dumping their inventory.
Despite a dip in buying activity in April from stay-at-home mandates and store closures, demand for cars is returning. And some of these buyers, perhaps not finding what they need in new-car inventory, are looking to the used-car market out of convenience.
“The used-vehicle market is reflecting, in part, the tight supply of new vehicles,” according to Automotive News on June 15.
Citing Larry Dixon, senior director of valuation services at J.D. Power, the outlet reported that the company “expects used-vehicle values to remain relatively strong because of low inventory of new vehicles, as well as pent-up demand” and that “used retail sales in parts of the country that have been less affected by the coronavirus have been above pre-virus expectations.”
Still, there are ways you can save and find a good deal for yourself.
You can definitely still shop around for a good deal, but time is of the essence here. Say you have a specific idea of what you want and you find a dealer offering a seemingly fair or competitive price. You’d naturally want to shop around a bit before deciding.
McParland advises that it’s probably in your own best interests to just pull the trigger when you come across something like this.
“There have been a few instances where I encouraged my client to jump on a deal and they wanted to wait for a better bid,” he says. “That cheaper offer never came and the original car sold.”
You’re about to spend your hard-earned money on a car, so you want it to be the perfect one that checks all your boxes. It’s understandable.
However, if you’re more flexible with what you want, it’s more likely you’ll find a deal that’ll suit your tastes. “I’ve had a few recent clients who had to have a specific color and option package on a car, only to find out that car was very hard to find and/or sold fast,” McParland says.
People who are willing to consider similar cars across different brands could very well end up going home with a better price. You can see a list of best used cars that aren’t necessarily a Honda or a Toyota for under $15,000 here.
“I was working with someone shopping for a new Kia Telluride, which is Kia’s hottest seller right now,” McParland goes on. “Availability is low and deals are minimal. They decided to look into the Ford Explorer, which had a lot more inventory and much better rebates.”
Cast a wide net
Jumping off of the being flexible bit of advice, it’s also good to cast a wide net when car-shopping. Make it a numbers game; the more lines you put out, the higher the chances are that you’ll get a bite.
McParland uses New York City as an example since many New Yorkers are apparently looking for “escape pods” from COVID-19 at the moment. When you have a surge in car buyers, demand quickly outpaces supply, which means dealers won’t keep inventory on their lots for as long. That makes them less likely to give you a competitive deal.
You can avoid this if you are willing to travel — or have your car shipped to you.
“I had a client in NYC shopping for an Audi lease and the local stores came back with bids that were way over their budget,” McParland says. “I found a dealer in Maryland with a much better offer, and even with the shipping cost, they still had money in their pocket.”
It might be a little more of a hassle — you should go and physically check out the car yourself and take it for a test drive if you can — but in the end, it might be worth it in savings.
Consider, also, that the COVID-19 pandemic is rapidly changing the way people buy cars. Dealerships are now starting to offer virtual walkarounds and other long-distance services in order to woo customers.
It could be valuable for you to call a few dealerships and see what they offer to make the process easier for you.
Focus on value over discount
Sometimes you run into a situation where you have a potential lead on a used car but the dealer isn’t being super flexible on the price. The key question to ask yourself, McParland goes on, is: “Can I find another car with similar miles and equipment for a lower price?”
If you can, then you should definitely explore that other option. If you can’t, the deal in front of you might be the best one.
“Remember, the margin for used car pricing is often in the hundreds of dollars, not thousands,” McParland reminds us. “Many dealers adopt a ‘no haggle’ price for their pre-owned units. Just because they won’t budge on a used car doesn’t mean they are ripping you off.”
Another tip to keep in mind is to have a general understanding of how much the car in question costs everywhere else. For used cars, asking prices can sometimes fluctuate a lot. Don’t be so quick to nab the cheapest example you find — there’s usually a reason why it’s so cheap.
Patience is a virtue. McParland points out that as factories and assembly plants re-open, production could catch up by late summer or early fall.
This increase in inventory will mean that there will be more for you to choose from — both in terms of cars and deals.
“Historically, most brands will increase rebates in late summer to help clear out the older models,” says McParland. “While that timetable may get thrown off with the current production delays, if shoppers aren’t finding the cars they want at a price that makes sense, often the situation will mean the deals will stay the same or get better. They aren’t likely to get worse.”
Read the original article on Business Insider