ST PAUL, Minn. — Car sales have done a 180-degree turnaround from a year ago when sales plunged 30%. New cars, used cars, the boom is one of the hottest and trickiest markets for consumers.
Tom Leonard, President and CEO of Fury Motors in St. Paul believes demand for vehicles is at an all-time high. “What has changed in the last few months is the availability of the new vehicles," he said. "Where we use to have a 100-day supply, we probably have closer to a 30-day supply.”
That makes Leonard a happy man. But the demand comes as a microchip shortage is stalling production at many auto plants. Couple that with employees returning to work, low interest rates and buyers flush with cash and finding your new vehicle could be a challenge.
According to Cox Automotive new vehicle production in North America was down 3.4 million in the first three months of 2021, but that hasn’t really affected new car prices. “The supply is short but it really hasn’t changed new vehicle pricing hardly at all because we have Manufactures Suggested Retail Pricing,” Leonard said.
The trendier the vehicle, the closer to sticker price you’ll pay. At Fury Motors the summer-type vehicles are the hardest to keep on the lot. “The fun ones are selling" said Leonard. "The convertibles, the Jeep Wranglers … all the cars that are kind of get out and experience an adventure, they’re hot.”
According to Edmunds.com, a website that lets you compare and shop for vehicles, the average price of a new car is $40,000, a used car $23,000. Sounds high, but remember in this climate, your current vehicle is a big asset. “Because used vehicles, people’s cars, are worth more today than at any point in time in the last three or four years,” Leonard said.
Make sure you capitalize on that. Dealerships are paying top dollar for trade-ins, but depending on the make and model it may be more lucrative to sell privately. And if you lease, ask the dealer about turning it in early so you can take advantage of your vehicle's peak value.
Consumer Reports negotiating tips recommend not including your trade-in as part of the negotiation. Agree on the price of the new car first – then talk trade-in value. This it makes it easier for you to clearly determine how much you’re paying.
Don't expect sales to slow anytime soon. Industry analysts predict things won't level off until the microchip shortage ends later this year, or in the first quarter of 2022.