Why Right Now Is A Great Time To Buy Your Car
Aspiring car owners are always looking for great deals and discounts on their purchases. If there’s some good news about 2020, it may very well be that this is the year that owning a car becomes easier than ever. The chaotic past few months have significantly disrupted the demand and supply chain for vehicles. Dealers currently have an excess supply of vehicles and not enough demand, which is why right now is the perfect time to buy a car.
The retail market operates on a straightforward formula. The higher the demand, the higher the price. The lower the demand, the lower the price.
When there is a high demand for a particular product, retailers raise the price to increase their profit margin and also as an attempt to lower demand so that the demand and supply gap doesn’t widen. Similarly, when the demand for a particular product is low, supply is generally in excess. Here, retailers lower the price to fuel demand to bridge the demand and supply gap.
Currently, there is not a lot of demand for vehicles in the United States, an excess of supply, but limited access to the physical market. In this article, we discuss these and some more reasons why right now is the perfect time to buy a car.
Falling Car Sales
Where 2020 has been difficult for car dealerships, March, in particular, was awful in terms of sales. Overall, vehicle sales across the United States fell by 27% in the first quarter of 2020. Though sales improved a bit near the end of April, the total was still 48% short of the predicted sales figure pre-pandemic.
The fall in sales again brings us back to the demand and supply mechanism. Lower sales represent low market demand for vehicles, and that doesn’t come as a surprise since the majority of Americans are struggling to make ends meet during the pandemic.
Lower demand consequently means dealers are also offering deals and discounts to interested customers to coax them into buying cars.
Dealerships place orders based on the previous month’s predicted sales, and that’s what they did at the start of 2020. However, the pandemic adversely affected sales, turning the entire inventory mechanism upside down.
Where having a month or two’s worth of inventory is normal, dealerships currently have over four months’ worth of inventory. In fact, at the start of May 2020, Honda and Volvo dealers stated that they had over 164 days’ supply of vehicles.
What’s shocking is that their inventory backlog is manageable compared to that of Genesis, which has 226 days’ worth of vehicles in storage. Given these statistics, it doesn’t come as a surprise that an increasing number of dealers are offering amazing deals.
Competitively Lower prices
The competition in the vehicle market is real at the moment because the stakes are incredibly high for dealers. We are talking about billions of dollars’ worth of losses if the inventory backlog grows, and we enter 2021 with four months’ worth of vehicle supply from the previous year.
If you peruse through just five different dealers in your areas, you will notice each one offers a little extra discount or some extra perk to potential customers to secure that sale. If you are lucky, you may even get excellent after-sales service terms for the next year or maybe even more.
Make sure you do your research before you approach a dealer. Even though the customer always holds a lot of power, the current state of the market gives you a little extra edge when it comes to negotiation, so don’t let that opportunity go.
Flexible Auto Loan Terms
Auto dealers are genuinely struggling to convince people to purchase vehicles during this prolonged period of economic uncertainty. The majority of the population is facing uncertainty regarding their job security and thus are hesitant to opt for auto loans.
As a solution, dealers are now providing flexible loan terms to customers. They are offering lower payment options with minimal or no interest rates. They are even offering longer loan terms to customers to encourage potential buyers to make a purchase.
People who think of their vehicles as an investment and keep them for six to seven years can benefit from zero-interest long-term car loans. It can also prove to be encouraging for those with relatively low but stable incomes. Obtaining a loan for them with such favorable conditions would have been next to impossible but not in 2020, which why right now is the perfect time to buy a car.
People with good credit scores should have absolutely no issues when applying for a loan, especially now. However, even those with a not so favorable track record can obtain auto loans with minimal interest as dealers are becoming increasingly aggravated with the inventory backlog and declining sales.
Many dealers who still have 2019 models in their inventory are particularly motivated to get rid of those vehicles. These cars are fast losing their worth as the 2020 models clog up the sales funnel and people lose interest in the previous year’s models. If you want, you could actually get an incredible deal on some vehicles from 2019’s stock.
Another major factor hindering vehicle demand and supply is the physical lockdown and social isolation terms and conditions. People are avoiding traditional markets, so they cannot physically inspect different options and chose one. Because buying a car is a significant decision, aspiring car owners like to get all information possible through the salesperson at a dealership before making a purchase.
Because a significant part of the vehicle purchase process revolves around in-person communication, the lockdown and self-isolation have disrupted regular business practices. In an attempt to overcome this hurdle, an increasing number of dealerships are taking the process online.
You can now view, chose, and go over the specs of different cars through online catalogs offered by many dealers. You can even live chat with a customer representative to find out the different terms and conditions.
There are several other ways to start the vehicle purchase process remotely. As long as customers can do their research and are in contact with a dealership they trust, buying a car has probably never been easier.
Once in a Life Time Opportunity
Many people are probably still hesitating despite us mentioning all the reasons why right now is the perfect time to buy a car, and their hesitation is understandable. During a period of global economic insecurity, committing to loan terms of any kind might seem like a difficult decision to make.
What if we told you that the economy might stay disrupted for quite a while, but you may but get such favorable loan terms later on? Zero-interest loans are incredibly rare, and thus you should avail a good deal when you see it. The average loan term is also limited to three to three-and-a-half years, but dealers are willing to extend it to a good seven years for now.
Moving forward, manufacturers may reduce the supply, effectively restoring peace to the currently disheveled vehicle market. Once that happens, you won’t find dealers willing to go the extra mile to make a sale.
There really isn’t much else we can tell you to convince you as to why right now is the perfect time to buy a car. Just know that currently, dealers need to make the sale so you can drive a hard bargain, and they will be extra willing to compromise and offer a deal incredibly favorable to you.