When Will the Best Car Deals Appear?
With the economy in shambles, 20% unemployment, and car sales plummeting, those of you shopping for a car right now are wondering why you're not seeing incredible deals, and when can we actually expect to see them?
Short answer: If the economy and recession play out as expected, used car deals should peak around August of this year. But if the recession turns out to be worse than expected, then peak deals should arrive around November. This is all according to the latest Black Book Market Analysis - which I tend to agree with.
Black Book keeps close track of the wholesale automotive market (basically where dealers buy and sell used vehicles). Here's a summary and highlight from their report.
- A large influx of used cars are predicted to hit the marketplace over the next 6 months, on top of the unsold inventory from the March-May time period. These will be from:
- Prolonged lease returns that were delayed due to the economy shutting down
- Downsizing of rental fleets
- Increased repossessions
- The 3 segments of used vehicles that have shown the biggest drop in demand at auction are:
- Sub-Compact Cars
- Expensive Luxury Cars
- Premium Sporty Cars
- Covid-19 has hit the Minivan segment especially hard, due to the high number of these types of vehicles going into rental fleets. Especially when it comes to Chrysler Pacifica, Chrysler Voyager, and Dodge Grand Caravan (50% of these minivans go to rental fleets or leases)
- Prices of used vehicles at dealer auctions are predicted to be about 15% lower on average compared to pre-COVID for the remainder of the year (retail prices that car shoppers see are only about 5% lower now, although we should see these bigger discounts reflected more closely towards the end of summer as consumer demand weakens and we start getting more reposessions).
- Older used vehicles (6 years or older) will probably not decline as much in price due to increased demand for these.
- New car inventory is depleting due to production shutdowns, and some models are actually close to depleting their inventory, specifically pickup trucks in some markets.
- Lease returns will peak in the fall
- For those who get a good deal on a used car this year, more good news is that your car is predicted to hold its value well in 3 years due to reduced used car inventory from rental fleets.
3 Steps Every Car Buyer Needs to Take to Save Maximum MoneyThe key to getting the best deal is to gather price or lease bids from as many local dealers as possible. Then shop that best price around until no one can beat it. Here are the steps:
Step 1 Get Prices From My Trusted NetworkSelect the vehicle you're interested in to see if there are local dealers in my network who will provide you with their best upfront price. You will get direct access to an internet sales manager who you can further negotiate with online (no need to visit dealership).
Step 2 Get Prices From TrueCar / CarsDirectTrueCar, and CarsDirect are my top 2 online price quote recommendations. These services show you pre-negotiated prices from dealers closest to you - and the deals are usually pretty decent. But remember, you can still negotiate further.
Step 3 Complete my ChecklistFollow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan
Each week, I'll keep you up-to-date on the latest car deals and news that might affect your purchase. This includes...
- Best Rebates, Incentives, and Lease Deals
- Latest Car Buying Scams and Tricks
- The Best & Worst Time to Buy a Car
- Which Cars You Should Avoid