Cars for sale right now are over-priced
Now is not the time to buy a new car. The chip shortage has meant that new car dealer are short on inventory. As a result, most dealers have started charging more than sticker price for new cars and trucks that are in short supply. In other words, they’re adding an extra charge over and above the full retail manufacturers suggested retail price (MSRP).
Car site Edmunds.com revealed data that shows 4 out of 5 car buyers paid more than MSRP in January, 2022. Edmunds states that the upcharge amount was around $728, on average, though some paid a four-figure markup on vehicles like; Hyundai, Kia and Honda. the problem is even worse for highly popular electric vehicles and hybrids. Those can cost up to $10,000 more than MSRP.
During January, Cadillac dealers added and average $4,048 to the price of new vehicles, while Kia dealers added a $2,289 markup. Ford dealers added less, with an average of $163 MSRP. GM Chevrolet and GMC brands sold 625 and $677 more than MSRP.
Cars for sale — how to make wise choices during this crazy period
Fixing your car versus buying a new one
You fix your car, sell it yourself and buy a new Kia
You have a older vehicle that’s worth an inflated $6,000 (as a private sales) in today’s used car market. But it needs a new transmission that’ll cost $3,500. If you don’t fix it, your car is only worth scrap value of around $400. You could spend the $3,500 on the transmission and then sell the vehicle yourself, turning a $2,500 profit which you can apply to the a new Kia. In that scenario you make $211 and wind up with a brand new car.
You fix your car, trade it in and buy a new Kia
You hate selling to the public and would rather trade it in. You spend the $3,500 on the transmission repair and the dealer offers you $4,000 on a trade in. You make a measly $500 profit which you apply towards a new Kia. You’ll still overpay for the Kia, but by $500 less out of pocket.
You fix your car and hold onto it for another year and a half
The chip shortage is predicted to ease in 2023. That’ll increase the supply of new cars. However, due to the pent up demand, it doubtful you’ll be able to negotiate a price below MSRP. In other words, you’ll pay sticker price. Your repaired trade in will lose some value in the interim, but you should still be able to get $3,000-$3,500 if you trade it on the new vehicle.
Conclusion: You’ll overpay less if you buy a domestic brand than an Asian brand. But domestic brands don’t hold their value as well and aren’t as reliable over the long term.
In this market, it makes sense to repair your old car rather than overpay for a new Asian car.
Posted on by Rick Muscoplat