While spring and summer might see improved car availability due to easing supply chain issues, get ready for a "new normal" when it comes to pricing.
Sticker Shock at Dealerships
Car experts warn that pre-pandemic car prices are a thing of the past.
"These are the new normal prices," says Rebecca Lindland of Cars.com. This partly reflects the tech-loaded features expected in new cars today.
New car prices have dipped slightly but remain significantly higher than 2020. The average new car cost nearly $49,000 in February, down from its peak but still 29% more than pre-pandemic levels. Used cars show a similar trend, averaging $31,556 in March, 33% higher than March 2020.
Inventory on the Rise, But Competition Remains
The good news: car dealerships have more cars on their lots. As of February, there were 80 days of new car supply – the highest in two years. Used car inventory has also seen some improvement.
However, don't expect a buyer's paradise. Many consumers are still price-conscious, with over half planning to spend under $30,000 on a new car.
New vs. Used: Weighing the Options
If your budget allows, new cars might offer better value right now. Manufacturers are producing more cars than there's demand for, leading to increased incentives. Additionally, used car prices are at record highs, with those under $20,000 typically having many more miles than pre-pandemic options.
Here's a breakdown:
New Cars: Expect to pay closer to the sticker price, but you'll get the latest features, potentially lower interest rates, and a longer warranty.
Used Cars: While typically cheaper upfront, you might get less car for your money due to higher mileage and potentially higher repair costs down the road.
Electric Vehicles (EVs): A Glimpse into the Future
The selection of used EVs is growing, allowing you to explore electric options without the long wait times seen on new models. However, keep in mind that new EVs are still more expensive than the average car, and government tax credits might not offer significant savings due to stricter eligibility requirements.
The Takeaway:
While car prices remain higher than pre-pandemic levels, there's more breathing room for negotiation due to increased inventory. Consider your budget, driving needs, and long-term ownership costs when deciding between a new or used car. Don't forget to explore hybrid options that offer a blend of electric power and gasoline backup.