Deals on Vehicles Will Be Hard to Find This Holiday Season

Lack of Inventory Means Limited Deals

Vehicle buyers hoping to score an end-of-year deal may want to think again. Manufacturers and distributors are scaling back deals and discounts this holiday season amid a severe shortage of inventory.

With consumers haggling over a limited number of cars and trucks, dealerships don’t need to bargain with additional incentives. Last month J.D. Power found 87% of all new vehicles were bought for the sticker price or more. In July it was 75%. Prior to the pandemic, just 36% of vehicle sales went for the asking price or higher.

Vehicles are also moving off showrooms at a record pace, remaining on dealership floors for fewer than 10 days in November. The average time for a new vehicle is 19 days. For context, it was 48 days in 2020.

Dealers Add Charges to the Sticker Price

With inventory for new and used vehicles at record lows, manufacturers and dealers are halting sales and adding charges to the manufacturer’s suggested retail price displayed on vehicle windows. In addition to those charges, dealers are also adding markups. Dubbed “market adjustments,” these extra fees had previously been used for rare vehicle models. Now they are found on a broad range of cars and trucks.

For some dealers, upcharges and markups are necessary to survive. With supplies limited, monthly sales have plummeted at smaller dealerships. These additional fees help them meet their monthly expenses.

Average Vehicle Prices Surge

Prices for new vehicles have averaged about $44,000 in recent weeks, according to J.D. Power. This is roughly $10,000 more than prior to the pandemic. Meanwhile, the average price for a used vehicle so far in December is more than $30,000—a new milestone for the secondhand market. With limited inventory, manufacturers and dealers are focusing on high-end vehicles, pushing budget-conscious car buyers out of the market.

The demand and supply imbalance in the automobile industry is unfortunately expected to spill over into 2022. That means consumers likely won’t see many deals on vehicles for a good part of next year as well.

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