My lease was up on my 2018 vehicle. I was excited to go car shopping.
However, what I realized as I ventured out was that the auto industry also has its challenges from the Covid-19 pandemic shutdown. Most automotive and supplier plants around the globe shut down and production was stopped.
Only now are inventories returning to normal levels. However, for 2021 new automotive models there has been a delay.
Typically, within the auto industry, new models are available for sale around September. However, several manufacturers are waiting for their new models to be delivered in February or March.
This is both good and bad news. The good news is cars that have been sitting at dealers with large inventories are being discounted.
Also, for vehicles with new enhancements or body style changes for 2021, the 2020-year models are being slashed.
I found this out when shopping around. I was looking at the Acura MDX, the BMW X3, the Volvo XC60, the Hyundai Sante Fe and the Kia Sorrento.
That is, I was looking for a mid-size SUV, and most of these vehicles have new models coming out. That often means you can buy the previous year’s inventory at a discount.
However, when I inquired about 2020 models I was surprised by how much of a discount was being given.
We all know the vehicle immediately depreciates as soon as you drive off the lot. Being a year older, even with zero miles, you are going to lose another 15% in value.
Several of the dealers I visited were taking $7,500 to $14,000 off MSRP price tags. Also, interest rates are low, so I knew this would be a great time to purchase and finance long-term vs. leasing a new vehicle.
But did I want to miss out on some of the latest technology, designs, or models?
Consider the Ford Mustang E-Mach SUV, an electric sports car meant to compete with Tesla.
Well, I was always told growing up to never buy the model’s first year. “Let them sort the bugs out,” my Dad used to say. And that probably still holds true for many vehicles.
Meanwhile, the Kia Telluride is in its second year and it seems to be the hottest SUV out there. It’s selling with a markup of over MSRP +$10,000.
Making the deal
The hardest part of car shopping is dealing with the high sales pressure environment and negotiating.
However, you might have the advantage this year as I did, as many people are shopping online and receiving quotes via emails.
As I finally selected the vehicle I was most interested in, I went around to several dealerships within a 200-mile radius to see who had the car I was interested in and then requested their best out-the-door cost.
While that was happening, to take further control of my buying power, I contacted two of my banks and was pre-qualified at very attractive interest rates.
Why did I do this? Because when you receive your quotes from the dealers they always want you to finance through them. They are going to charge you a higher rate for the discount they provide so they can recapture the difference with the interest being paid.
But, if have your financing, now you can take those multiple quotes and share them with the dealers. They have to bring their costs down if they want to win your business.
I had the best price at one dealership. However, they didn’t have my car in stock.
It was the same model and features. However, it wasn’t the color I wanted. When I visited the dealer who had the car I wanted in stock, they had no interest in matching that price.
So I went to the dealer who was offering the best price and said if they want my business they needed to trade their current car with the other dealership for the color I wanted.
Guess what … they did it, the price stayed the same and as I drove home I waved at the other dealership!