2020 hasn’t been a great year for car dealerships. Showrooms are closed. Inventory is overstocked. Brand new vehicles are being left adrift at sea for days because auto lots aren’t open to receive them. Car dealerships are bleeding money and desperate to move inventory.
Experts are saying it’s the best time to buy a car in decades. Negotiating power is in favor of the buyer, including flexible payment options and no money down. By shopping online, buyers can negotiate rates, compare deals, and enjoy the benefits of shopping in a depressed market.
In the first 15 days of April, the price of wholesale vehicles decreased by 11.8 percent, and some analysts are forecasting that prices could drop even further.
But sales aren’t dropping as much as some analysts forecasted in early April. Trucks, SUVs, and vans have sold particularly well, and many dealers have used dramatic tactics to manage supply. Incentives like 0 percent financing, 84-month (seven-year) loans, and “90 day to First Payment" programs have helped to keep sales moving.
Some carmakers have offered discounts for healthcare professionals and first responders, turning their unprecedented supply issues into positive public relations campaigns. Additionally, many manufacturers are taking steps to return to normal; Ford and General Motors are currently planning on a May 18 production restart.
The clear indication is that the manufacturers expect demand to rise — and for the markets to shift in their favor.
While auto retailers hardly expected nationwide shelter-in-place orders, they’ve taken action to respond. In April 2020, auto interest rates fell to an average of an eye-popping 4.37 percent. Given low sticker prices and widespread incentive programs, buyers certainly hold an advantage in the current market.
But while vehicle prices are significantly lower than pre-pandemic forecasts, drivers looking to take advantage of the depressed auto market should move quickly. Comparison shopping is key to finding opportunities in a crowded market eager to move inventory.
The automotive market has certainly changed dramatically due to the COVID-19 pandemic. To this point, buyers have benefited. Dealerships and manufacturers are still taking aggressive actions to move their inventories, and shoppers can take advantage of low interest rates and other incentives.
Most dealerships now offer no-contact delivery & pickup, and in many states, drivers can find financing and purchase vehicles without ever interacting with salespeople. For some consumers, that’s enough of a reason to start shopping.
However, the clock is ticking. As the market corrects itself, these incentives will shrink — and prices will eventually rise to their pre-pandemic levels. That correction is coming quickly, and savvy buyers will need to act quickly to take full advantage.