Good day to all the future car buyers out there in the HIVE. Allow me to introduce myself, in a generic way, as to not get in trouble with HR. I'm a Finance Manager (known by many other title such as: F&I Manager, Business Manager, Loan Officer, FIG, etc) for a large auto dealership. I have been in the business for a little over three years now, with the first two in sales (new, used, and internet), and the last year plus in the Finance Office.
Today, we're going to talk a little bit about how to approach the car buying experience in the current market.
It doesn't really matter, but we sell Toyotas and used cars. Now, I will admit right up front that I am biased towards Toyotas, and have thought they are the best value in the auto sphere, even before I started in the industry. Between my wife and me, we have owned more than a dozen Toyotas over the last 20 years. If you have any questions about Toyota in general, feel free to comment.
First thing to be aware of as a buyer in this market is that the supply issues that are keeping groceries off the shelves, and making it hard to get windows or shingles for new house construction, is impacting the car industry pretty hard. Most manufacturers have had rolling shut downs at their plants for a variety of reasons, including staff shortages due to Covid restrictions, and the inability to get parts. The part that is the biggest culprit is the semi-conductors (computer chips) that make our cars so much safer they were than just a few years ago. I saw a graph somewhere that showed the number of semi-conductors in a car in 2006 was around an average of 60. In 2021, that number has risen to more than 300. Because the automakers can't get the parts they need to build the cars, there is a supply crunch. There are more buyers looking for a car than vehicles to satisfy that demand. This means that the prices of cars are at record highs, and if you can find a new car dealer that isn't adding a markup above MSRP, you should buy from them. The markups are getting pretty extreme, with there even being a class action lawsuit that has been filed in Texas alleging price gouging.
Okay, so supply is messing with the inventory levels. So what? This also means that you can't just go to your local dealership and take a test drive to see what you like. There is a very good chance that there isn't a single new car that is available for sale. I'm talking about all the cars that are being built, the huge majority of them are sold sight unseen, usually well before they are even produced. If you think you will just wait until one arrives that you can test out, you will be waiting a VERY long time. A good dealership will let you put down a small, refundable deposit on an order for what you think you want, and when it gets there, you can make up your mind for sure. Although, if you change your mind (you ordered blue, but change your mind and want red), be prepared to go to the back of the line. Right now, it could be anywhere from 3-6 months (or longer) to fulfill an order. If you are flexible on features, options, trim level, color, etc, you will be looking at a shorter wait. If you have to have the exact color with the exact options packages, you might even be waiting a year until the dealership can fill that order.
Another thing: do you have a car that you are looking to trade in? If so, thank you for giving us the opportunity to buy it from you. The used car market is even more out of whack than the new car market. New car prices are up about 8% over the last two year, while the used cars are up over 40%! For example, a young lady was in last week to replace the Certified Camry she bought in 2020. She was in an accident, and it was totaled. Looking at basically the same car as what she bought then (2019 Camry LE with 30k miles), it was going to cost about $10k more today. Now, on the plus side, she had GAP, and the insurance payout on her car was also much higher than it would have been last year so she was in an okay place, but it really helped me to understand just how weird the used car market is. So yeah, if you have a car that you don't need, you should really think about selling it. It will never be worth more than it is right now.
There is much more that we can discuss, but this is a good end point. Just remember that if you aren't being treated with respect at the dealership, you are in the wrong one. There are plenty of good ones out there, and they deserve your business. I personally would rather pay a little more and be treated like more than a nuisance than to save a couple hundred bucks and hate every minute of the process.
So long for now from your new favorite FIG.