It’s hard to quantify the importance of a car, but it’s one item most people want to have and one item people worry about having the budget to buy.
Not all of the more than 228 million licensed drivers in the United States may own a car, or be in the market for a new one right now, but between availability and price, it’s not as easy to buy a car as it used to be.
Based on Kelley Blue Book data, the average new car price in November 2022 was at a record high of $48,681. This is over $2,000 more than what people were paying for a new car in November 2021, but prices have been averaging above the manufacturer’s suggested retail price for well over a year.
Issues with the supply chain are forcing up costs more than demand, Kevin Bahr, Ph.D., wrote on the Connection Point Blog. He is the chief analyst of the Center for Business and Economic Insight at the University of Wisconsin-Stevens Point Sentry School of Business and Economics.
“The automotive industry provides the prime example of how supply chain issues can drive price increases rather than demand,” Bahr wrote. “Since the impact of COVID in 2020, the auto industry has suffered supply chain problems, particularly in the offshore sourcing of semiconductors which in turn significantly limited the supply of new vehicles.”
Certain parts are harder to find, making it challenging to build new cars. There’s a global microchip shortage, impacting car production, that’s only just starting to recover. The trend toward owning luxury cars is also driving up average prices, according to KBB.
Higher prices and inventory shortages don’t mean a new car is out of the question, though. Even if you’re living on a fixed income or rethinking your budget post-retirement, there’s a car out there for you.
Consumer Reports suggested that it is best to approach car buying carefully.
Although domestic cars are easier to find than imports, price tags are still up. Patience, for now, is your best weapon, as well as being an informed buyer.
You want to equip yourself with the right tools to be able to react to a deal the moment you happen upon it.
This means knowing in advance what model and options you want along with what this should typically cost you. It’s not as easy to negotiate as it used to be, but you want to protect yourself from being ripped off.
“Our main advice for buyers in this tricky market is to act quickly and negotiate from an informed perspective. That can make the difference between getting a fair deal and getting no deal,” Consumer Reports said.
Another tool to secure in advance is financing. Getting pre-approved for a car loan lets you compare terms between your bank and the car dealer to find your lowest option.
While budgeting costs, it’s a good idea to establish your ceiling when it comes to car prices. You don’t want to pay too much over the sticker price since depreciation means you won’t get that money back when you resell.
You should also be willing to adapt if your ideal car isn’t immediately available. Consider shopping outside your immediate area or having a backup model or two you’d consider.
Pulling all of these car-buying tips into a single strategy, it’s more important now than ever to be an informed shopper. Take your time, and have patience, but also be willing to compromise or modify your strategy as needed. If you can find a reliable car that’s going to last, it will be a while before you find yourself in this position again.