After more than a year of record-high prices, shoppers looking for new cars might feel as if they need a Christmas miracle to find a good year-end deal.
High prices have been driven by high demand amid low inventory and car-chip shortages. The average transaction price for a new vehicle reached a record high of $47,681 in November, according to car pricing site Edmunds.
But all is not lost for deal hunters. Last month, the average transaction price for cars fell below the average sticker price for the first time since July 2021 and the volume of new-car inventory grew. The sticker price, MSRP, is the price at which carmakers recommend dealers sell cars. When the average transaction — or sales — price falls below it, it signals that some buyers are negotiating a lower price for their vehicles.
Diligent buyers can find year-end deals, but they have to go look for them, said Brian Moody, executive editor at Kelley Blue Book, a car valuation and research site.
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‘Be prepared to be flexible’
New-car shoppers eyeing a popular car model might find it hard to get a discount precisely because of the demand for it.
It will probably be harder for buyers to get bargains at a Honda or Kia dealership, for instance, because other shoppers would likely pay above the sticker price, Moody said. Honda and Kia sold their cars for for 6% to 8% over MSRP, on average, in November, according to Kelley Blue Book.
“The simple thing is, do not buy the thing everyone else is looking to buy,” Moody said.
The paid prices for compact and midsize cars have increased this year, as demand for lower-priced vehicles has grown. But they’re still a cheaper option than SUVs and trucks, according to Edmunds data.
Buyers may not be able to find the model they want, but could score a good deal if they’re flexible, said Patrick Olsen, executive editor at CARFAX, a site that provides data about cars.
Shoppers, for instance, could consider vehicles that are being redesigned for the next model year, such as the Kia Sportage, Olsen said.
“I might look to buy a (2022) Sportage,” Olsen said. “It looks different, but it still has almost all the same features. Because it’s the end of the previous generation, it’s not as popular as the newest version.”
Shoppers who decide to go this route, though, may not find the trim level or all the features they want.
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Negotiate with the car dealer
Every time a person goes to a dealership to buy a car, they should negotiate on price, Olsen said.
CARFAX suggests going in on a Monday or Tuesday to look at inventory and talk to salespeople without feeling rushed or being interrupted by other customers.
During the end of the year, dealers are trying to meet yearly and quarterly goals. Consumers should use that to their advantage, but give themselves enough time to negotiate.
“Give yourself time to absorb what they’re offering you and take a step back,” Olsen said. “Make sure that they’re really selling you on it and that you’re not just taking the first offer that they’re giving.”
When negotiating, Moody suggested buyers use the sticker price as their starting point and then figure out how much they have to go up from there.
“Maybe you just only pay the sticker price, and that would that would be a good deal at this point,” Moody said.
Do your research on auto incentives
According to Cox Automotive, incentives offered by car manufacturers remain at historically low levels. But that doesn’t mean they’re not out there, Moody said.
“It just means that not many of them exist,” Moody said. “The shopper is gonna have to really do research.”
Buyers can find cars with 0% APR such as the Hyundai Elantra. Qualified customers who finance a new 2023 Toyota Camry can get 3.49% APR for 48 months.
“Before you start shopping,” Moody said, “know your credit score, know the kind of car that you want, know your price range, and know the incentives that are being offered in your area.”
