Automobile looking for Black Friday offers could be very completely different this yr
David Paul Morris | Bloomberg | Getty Images
When it comes to buying a new car, this is not your typical Black Friday.
Deals and discounts that were once abundant at this time of year are harder to come by. An ongoing global shortage of microchips – key components needed to power today’s automobiles – continues to hamper manufacturers’ production of new vehicles, which has caused demand to outperform supply.
“Any other year you’d find deals,” said Jennifer Newman, editor-in-chief of Cars.com. “This year it will be limited.”
The supply imbalance has driven the average price of a new vehicle to around $ 44,000, according to the latest estimate by JD Power and LMC Automotive. That’s 19.3% more than in October 2020 when transaction prices averaged $ 36,887.
Consumer demand has also expanded into the used car market, driving up values there as well. For vehicles that are 1 to 3 years old, the average price is $ 38,974, up 46% from $ 26,627 two years ago, according to auto-shopping app CoPilot.
One reason for the record transaction prices is that automakers have cut their incentives because they generally don’t have to offer huge discounts to sell cars now.
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JD Power / LMC estimates the average manufacturer discount is $ 1,628, a record low. That’s a drop of $ 1,871 from $ 3,499 a year ago and the first time it’s been below 4% of the average sticker price.
While there are few offers, there are a few notable ones, according to Cars.com. This includes a factory discount of $ 1,250 to $ 4,000 on the Jeep Renegade 2021 (depending on location and vehicle features), which starts at just under $ 25,000. Starting at around $ 40,000, the 2021 Buick Enclave comes with a $ 3,750 discount. Both deals expire on November 30th.
Despite persistent inventory shortages, 63% of buyers in the market say they will buy a new car by the end of the year, according to a survey by Cars.com.
Your current car is your biggest negotiation item. Traders want your trade-in.
Senior Manager of Insights at Edmunds.com
If you are one of them, be prepared that there is little wiggle room on the price of the car, said Ivan Drury, senior manager of Insights at Edmunds.com. Buyers often pay more than the sticker price.
However, you may be able to negotiate the value assigned to a car you trade in.
“Your current car is your biggest negotiation item,” said Drury. “Dealers want your trade-in.”
Plus, you might be able to get a decent finance deal, he said. Some manufacturers still offer (or close to) 0% financing on certain brands or models for the most creditworthy consumers. Otherwise, the average interest rate on a car loan is around 4%, according to Experian.
And when you find something you like, it may be wise to act quickly. In the first half of November, 1 in 20 new vehicles were sold on the same day they landed at the dealership, according to Edmunds. Almost a third sold within the first week and almost half within the first two weeks.
On the other hand, if you can’t find what you really want and you have some flexibility in the timing of your purchase, it may be worth ordering your car rather than buying it individually.
“You can get exactly the vehicle you want,” said Newman of Cars.com. “You might just have to wait a while.”