Business Opinion

Down the Road: You May Want to Delay Your Car Purchase

During the 2021 Rolex 24 at DAYTONA, Cadillac shared a sneak peek of the 2022 CT4-V Blackwing (left) and CT5-V Blackwing (right). 2022 Cadillac CT4 V and CT5 V Blackwing. Courtesy of GM

West Hartford resident John Lyons is an avid car enthusiast and collector. He has consulted in the car industry for nearly two decades and follows the industry and trends closely. He has written for Car Collector, Sports Car Market, Old Cars Weekly, and written auction catalog descriptions for cars with values up to the seven figures that have been published by numerous auction houses. His consulting practice works with estates to assist in selling cars no longer needed by the families. 

By John Lyons

John Lyons. Courtesy photo

I am excited to be writing a monthly column to talk about a subject that is near and dear to me: cars. I am going to be talking mostly about new cars but will do occasional features on collectible cars and try to provide you tips to getting the best deal when buying a new or late model used car.

You are in the market for a car? Here is my advice: Don’t buy one now!

We are in an unprecedented time. Coming through the COVID era, many workers have chosen to either switch careers or remain out of the workforce all together. This has created worker shortages.

At the same time, computers and cars are more and more reliant on modern semiconductors so the result is a semiconductor shortage. Semiconductors are vital to today’s automobiles.  Without them, cars are merely paperweights. Nothing in the car can function without the operation of the onboard electronics. With some brands, the doors won’t even open.

Factories are also experiencing worker shortages. Companies that do have an adequate parts supply are still having some difficulty assembling cars at times.

Transport companies are having a hard time hiring drivers resulting in a lack of trucks to move cars from the factory to the dealer.

Every step of the manufacturing and supply process is a little harder today than it was two years ago. I expect this to remain the case for most of the rest of this year.

How does this impact you? When you shop for a car, you will see less inventory on a dealer lot. In the case of one local dealer I spoke with in preparing this month’s column, they have no new cars on their lot for sale. They have 16 inbound from the port, of which 15 were already sold with deposits paid. One remaining inbound car was available.

Many dealers are using the shortage as an opportunity to place what is called an “adjusted market value” (AMV) on cars they are selling.

Let’s say a car comes in with a sticker of $35,000. Some dealers are putting, for example, a $5,000 AMV on the car knowing buyers will have no choice but to pay their markup. Out west, I have personally seen a $100,000 AMV on a high-end Mercedes-Benz and $79,000 AMV on a new Ford Bronco. In the case of the Bronco, the AMV was higher than the sticker price of the car.

For what it’s worth, I watched a Bronco sell for over three times sticker at auction within a week of my writing this.

This trickles down to the used car market. No new cars results in more demand for used cars. More demand for used means higher prices. Used cars are up 50% or more in value over the last 18 months.

Other sacrifices today’s buyers are making are interest rate discounts. For what seemed like forever, most car dealers were offering zero percent financing to qualifying customers. That is no longer the case as dealers do not need to offer it to sell their cars.

Another example is free extended maintenance. For years, it seems like free oil changes and routine maintenance was included with nearly every new car. While some manufacturers still offer it, many do not.

Very rarely will you see a discount offered on a car. When you do see one, it is usually a very expensive car in perhaps a strange color combination or with lots of options that most buyers do not need. A local dealer I am friendly with had a car in their showroom for months with a $7,000 discount off sticker price, but it had what most would consider a hideous color combination.

I am interested in helping you save your money and seeing the best deal possible. If you absolutely must buy now, try to ask in your circle of friends if anyone has a used car they don’t need. Only buy a new or used car if you absolutely must. If you are in a situation that requires you to buy a car, do lots of homework. Find a dealer that isn’t charging an AMV or buy a brand that is perhaps not as strong a seller where dealers have more inventory.

Finally, if you own a leased car and the lease term is coming to an end, strongly consider buying out that car and keeping it. Most likely, it is worth far more than what the bank thought it would be back when you first leased it.

I will do a column in the coming months on leased cars to go into this in more detail.

Until then, I’ll see you down the road!

West Hartford resident John Lyons will be writing a monthly column reviewing cars and talking about the industry. He will also provide tips for those purchasing a car to help readers get the best deal.  

A version of this column appeared in the March issue of West Hartford LIFE.

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1 Comment

  • Retaining John Lyons to write a monthly car column is a great idea. He is highly respected. Inexorably, it appears that We Ha is becoming the primary source for reliable local news. All you need now to do is hook up with The Connecticut Tribune.

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