The car market keeps getting worse for buyers. Things may not get better until 2023, analysts say.

A car dealership lot with Ram pickup trucks.
A car dealership lot with Ram pickup trucks.

  • In September, wholesale used-car prices surged and vehicles sold faster than they did in August.
  • A shortage of new cars is driving secondhand prices up.
  • The worldwide supply of cars may not recover until 2023, industry analysts say.

Looking to buy a secondhand set of wheels for a reasonable price? You may want to wait a couple of years.

Used-car values have surged during the pandemic as a chip shortage reduced the flow of new vehicles off of production lines to a trickle. It looked like prices were starting to come down after hitting a peak this spring, but now that relief appears short-lived.

According to Manheim Auctions, the largest wholesaler of used vehicles, wholesale used-vehicle prices hit a record high in September of 27.1% above the prices from the same month last year. Retail prices tend to lag slightly behind wholesale, so consumers will likely feel the price hikes soon, too.

Even amid the inflated prices, demand for vehicles is high. The sales-conversion rate jumped to 65% in September, according to Cox Automotive, indicating that buyers are getting more aggressive. It was 52% in September 2019.

Used cars are selling extraordinarily quickly, and buyers will have to act fast if they want to get their hands on a particularly popular model, according to a new study from iSeeCars published Tuesday.

In September, the average used vehicle sold 32.8 days after being listed for sale online, according to iSeeCars. That’s compared with 34.6 days on average in August. In the months preceding March 2020, the average was 68.9 days.

Some of the fastest-selling used vehicles were the Tesla Model 3 (on the market 16 days on average), the Mitsubishi Outlander (19.7 days), and the Toyota Prius (20.7 days).

For months, industry leaders and analysts, including Intel’s CEO, have said that the chip shortage could drag on until 2023.

In light of the worsening chip crisis, forecaster IHS Markit projected in September that global vehicle production will be severely diminished through the rest of 2021 and throughout 2022. Production will also take a hit in early 2023, the firm forecasts.

That means the shortage of new vehicles that’s driving up prices will be with us for quite a while.

IHS Markit forecasted in October that the global supply of cars will start to stabilize in the second half of 2022 and begin to recover in the first half of 2023, Automotive News reported.

Read the original article on Business Insider

Shortages and high prices have upended car buying. Here’s how to navigate a purchase in these unprecedented times, according to experts.

Cars sit outside a used car dealership with spray paint on the windows advertising the vehicles.
Some used cars are selling for as much as their new counterparts.

  • Thanks to massive shortages and high demand, buying a car now is trickier than ever.
  • Shoppers should be extra flexible on just about every aspect of buying a car, experts told Insider.
  • There are also pros to leasing a vehicle or delaying a purchase until this all blows over.

If you’ve been following the news, shopping for a car probably feels incredibly daunting right about now.

Between a computer chip shortage, booming demand for cars, and a rat’s nest of other pandemic-related factors, vehicles are in short supply nationwide. Practically all cars – from the latest models to decade-old clunkers – cost significantly more than they did a year and a half ago.

It all means that the decisions surrounding buying a car have become more challenging than ever before. Successfully navigating this difficult market means resetting your expectations, expanding the options you’ll consider, and possibly even deciding not to buy a car at all, experts told Insider.

Flexibility is key

There’s a good chance you won’t find exactly what you’re looking for at precisely the price point you’re used to. Being open to a variety of brands, models, and options is the way to go in today’s market, Brian Moody, Autotrader’s executive editor, told Insider.

“The person who’s probably going to do the worst in terms of finding what they want is the person who’s very rigid,” he said.

People looking to buy secondhand should broaden their search to include older models than they’d normally consider, says Benjamin Preston, an automotive reporter at Consumer Reports. On the new side of things, being open to less-popular vehicle types like sedans, hatchbacks, and smaller SUVs could pay off, he added.

Prepare to pay up

Whether you’re shopping new or used, expect to fork over much more than you’re accustomed to, Ivan Drury, senior manager of insights at Edmunds, told Insider. New vehicles are selling at or above MSRP. And used cars, even older ones, are worth thousands more than before the pandemic. Some lightly-used vehicles are selling for as much or more than their new counterparts.

And don’t go in expecting to negotiate thousands off of a vehicle’s sticker price, Drury said. While that may have worked before, right now there are way more customers than cars – and dealers know that.

If you decide to stomach the astronomical used-car prices, be sure to keep that vehicle for the long haul, Drury said. One of the worst things you can do for your wallet right now is to buy a vehicle at today’s prices and dump it in a year or two.

Leasing may be your best friend

If you’re having trouble finding what you’re looking for or can’t afford the eye-watering price tags of some in-demand models, consider leasing until it all blows over, Drury said.

“Just borrow something you’re okay with instead of buying something you don’t love,” he says.

Leasing costs less per month than paying off a car loan, but the trade-off is you have to return the vehicle after the two- or three-year lease period. People who go this route should check automaker websites for lease specials on certain models and trims, Drury said. Customers afraid of exceeding the mileage limit on a lease should see if they can add miles at the beginning of their contract.

“Bottom-line shoppers” who are leasing as a last resort should hunt for vehicles with the lowest monthly cost and the lowest up-front payment, Moody said.

Work with what you’ve got

With prices the way they are, investing in an existing vehicle could make more financial sense than it did just a few months ago, Preston, of Consumer Reports, said. Even expensive repairs may be worth it in the long run if they allow you to delay a purchase and escape today’s chaotic market.

“Our advice is if you can wait, that’s probably your best bet,” Preston said.

Read the original article on Business Insider

Trying to buy a car right now? You might be better off waiting.

A car dealership lot with Ram pickup trucks.
A car dealership lot with Ram pickup trucks.

  • Buying a new car in this inflated market is tricky but not impossible, Consumer Reports says.
  • The best bet for most consumers is to delay buying a car.
  • That means forking over extra for repairs or buying out a lease, according to the nonprofit outlet.
  • See more stories on Insider’s business page.

If you’ve browsed an online car marketplace or read the news over the last 18 months or so, you’re probably aware that car prices are completely and utterly out of control.

Values plummeted early on in the pandemic as economic uncertainty and the fear of infection kept buyers at home. But since then, demand has exploded and prices for both new and used cars have surged higher and higher.

Several new vehicles are selling for above MSRP and used models on the wholesale market are going for over 40% more than they would have in February 2020, according to Manheim Auctions. It’s gotten so bad that nearly half of people interested in buying a car are calling it quits for now and are waiting for prices to come down, a recent Kelley Blue Book survey suggests.

That’s probably a good idea, according to Consumer Reports.

“Our advice is if you can wait, that’s probably your best bet,” Ben Preston, an automotive reporter at the nonprofit outlet, told Insider.

With car prices at unprecedented levels and set to stay there for the foreseeable future, Preston recommends that consumers hang on to their existing vehicles rather than hoping for a deal. The global shortage of computer chips that’s at the heart of the ridiculous pricing doesn’t seem like it will resolve itself anytime soon. That means new cars will be in short supply and used ones will be in high demand for months – possibly years – to come.

An expensive repair that would’ve forced someone to ditch their car for a new one 18 months ago could make financial sense nowadays, Preston says. Replacing an old vehicle is pricier than ever, so a $3,000-$4,000 transmission, for instance, could make sense depending on how long the owner plans to keep driving that vehicle. If coming up with the cash is an issue, owners can shop around for repair shops that offer short-term financing.

The same goes for leases.

If you are nearing the end of a lease, it could be a good idea to hang on to the vehicle by buying it out, Preston says. Lease agreements stipulate a price that the lessee can buy the vehicle for at the end of the two or three-year term based on its projected residual value. Because nobody could have predicted how values would spike in 2020 and 2021, buying out a lease could be a good way to secure a vehicle at below-market prices.

Shoppers who can’t wait should look for less popular models and be prepared to make some sacrifices on age and options, Preston says.

“It’s going to be tricky to buy a car right now,” he said. “It’s not impossible.”

Read the original article on Business Insider

The 10 longest range electric vehicles you can buy in the US that aren’t Teslas

Hyundai Kona Electric
Hyundai Kona Electric.

  • Tesla’s four models can go farther on a full battery than any other electric vehicles.
  • But there are plenty of non-Tesla EVs that deliver solid EPA-rated range.
  • Ford, VW, Chevy, and Hyundai are the next best picks for range after Tesla.
  • See more stories on Insider’s business page.
10. Porsche Taycan – 227 miles

2021 Porsche Taycan._KL1
2021 Porsche Taycan.

Porsche’s first attempt at an all-electric car has turned out to be a smash hit, with the Taycan flying off of dealer lots. There are several Taycan models and two body styles to choose from, but the $103,800 Taycan 4S gets the best range of the bunch. 

9. Polestar 2 – 233 miles

2021 Polestar 2
2021 Polestar 2

The Polestar 2 is the first EV from Polestar, a new EV brand that spun out from Volvo. The 2021 model gets 233 miles of EPA range, but a future single-motor model due out in January is set to deliver upwards of 260 miles, according to the company.

A 2021 Polestar 2 starts at around $60,000, but the 2022 model will run you as little as $47,200. 

The Polestar 2 earned the title of Insider’s Car of the Year in 2020

8. Jaguar I-Pace – 234 miles

Jaguar I-Pace.
Jaguar I-Pace.

Jaguar’s squat little crossover starts at $70,000. The all-wheel-drive SUV delivers a whopping 394 horsepower and 512 pound-feet of torque, Jaguar says. It’ll hit 60 mph in 4.5 seconds, the company claims. 

7. Audi E-Tron GT – 238 miles

Audi E-Tron GT electric sedan.
2022 Audi E-Tron GT.

The E-Tron GT is Audi’s new electric sport sedan to take on the Tesla Model S and future EVs like the Mercedes-Benz EQS. It starts at around $100,000, and a high-performance RS version is available too. That one will run you $140,000. 

6. Kia Niro EV – 239 miles

Kia Niro EV
Kia Niro EV.

The base Kia Niro EV costs just over $39,000. There’s also a $44,650 Premium trim that gets you upgraded materials and features, but no more range. 

Check out Insider’s full review of the Niro EV here

5. Chevrolet Bolt EUV – 247 miles

EMBARGO 2/14/2022 4PM ET 2022 Chevrolet BoltEUV 010
2022 Chevrolet Bolt EUV.

Chevrolet broadened its EV lineup in 2021 by launching a crossover version of the Bolt EV called the Bolt EUV. That stands for Electric Utility Vehicle, in case you’re wondering. 

Despite having “utility” in its name, the $33,000 vehicle actually offers slightly less cargo space than the Bolt EV hatchback. It also has a skosh less range due to its higher ride height. 

There’s just one problem for potential Bolt EUV buyers: Amid GM’s massive recall of Bolt EVs with faulty batteries, the carmaker has halted production of the EUV until at least mid-October. 

4. Hyundai Kona Electric – 258 miles

2022 Hyundai Kona Electric.
2022 Hyundai Kona Electric.

Hyundai’s popular subcompact SUV has had a battery-powered sibling in the US since 2019. All trims deliver the full 258 miles of estimated range. A base 2022 Kona Electric will run you $34,000 to start, down more than $3,000 from the 2021 model. 

3. Chevrolet Bolt EV – 259 miles

EMBARGO 2/14/2022 4PM ET 2022 Chevrolet BoltEV 006
2022 Chevrolet Bolt EV.

Chevy gave the Bolt EV a sleek refresh for 2022, adding on slimmed-down LED headlights and a color-matched grille panel. The new Bolt offers the same range as its predecessor, but comes in thousands cheaper at $31,000.

However attractive a buy the Bolt EV may be, you may need to wait a while to get your hands on one. Chevy has halted production of the EV until it can secure more reliable battery packs. 

 

2. Volkswagen ID.4 Pro – 260 miles

2021 Volkswagen ID.4.
2021 Volkswagen ID.4.

The ID.4, VW’s first EV for the US market, gets up to 260 miles of EPA-rated range in the Pro trim, which starts at $39,995. The sold-out first-edition model can travel 250 miles on a full battery. 

1. Ford Mustang Mach-E – 305 miles

rear ford mach-e
Ford Mustang Mach-E.

Ford’s first electric SUV gets an impressive 305 miles of range in the California Route 1 trim, which retails for $50,400. The model comes standard with the Mach-E’s larger battery pack and rear-wheel drive. 

The $42,895 base model, the Mustang Mach-E Select, earns an EPA range rating of 230 miles.

Read the original article on Business Insider

Cash in on used car prices by flipping one of these 15 models at the end of your lease

2014 Jeep Cherokee.
People who leased a 2018 Jeep Cherokee could flip it and pocket more than $7,000.

  • The pandemic has driven used-car prices sky-high.
  • Owners can cash in by buying their car at the end of a lease and flipping it to another dealer.
  • The models most ripe for profit include the Kia Forte and Jeep Compass, an iSeeCars study found.
  • See more stories on Insider’s business page.

It’s not just dealerships that are profiting from today’s insatiable appetite for used cars. Amid an unprecedented shortage of vehicles on dealer lots, sky-high prices, and a buying frenzy, car owners can cash in big too.

Pocketing thousands of dollars can be especially simple for people whose leases are expiring. At the beginning of a lease, the dealer sets the residual value of the vehicle: the agreed-upon price that a customer can buy the car for at the end of a lease term, often three years.

Today, used-car values are so inflated (for a host of pandemic-related reasons) that some lessees can turn an instant profit by buying back their leased vehicle and flipping it to another dealer. Dealerships starved for inventory are willing to pay top dollar for secondhand vehicles, especially lightly used cars with low miles.

According to automotive research outfit iSeeCars, the average three-year-old used car is worth 31.5% – more than $7,000 – above the residual value estimated at the start of its leasing term. Coupes, sedans, and pickups have seen the largest jumps in value, the site found.

iSeeCars analyzed nearly 10 million car sales to determine the 15 2018 models people should buy at the end of their lease to flip for the biggest profit. Check out the list below:

15. Ford Expedition

Ford Expedition 2018
Ford Expedition.

Increase over predicted residual value: 45.8% or $15,830

14. Nissan Versa

2018 Nissan Versa Sedan.
Nissan Versa.

Increase over predicted residual value: 46.1% or $3,961

13. Jeep Cherokee

2019 Jeep Cherokee
Jeep Cherokee

Increase over predicted residual value: 46.3% or $7,418

12. Jeep Compass

Jeep Compass

Increase over predicted residual value: 46.4% or $7,163

11. Kia Forte

Kia Forte 2020
Kia Forte.

Increase over predicted residual value: 46.7% or $4,913

10. Mazda Mazda6

2018 Mazda Mazda6.
Mazda Mazda6.

Increase over predicted residual value: 46.8% or $7,193

9. Hyundai Elantra

2017 Hyundai Elantra
Hyundai Elantra.

Increase over predicted residual value: 47.9% or $5,319

8. Chevrolet Malibu

2018 Chevrolet Malibu
Chevrolet Malibu.

Increase over predicted residual value: 48.2% or $6,392

7. Nissan Leaf

2018 Nissan Leaf
Nissan Leaf.

Increase over predicted residual value: 48.3% or $6,167

6. Chrysler 300

Chrysler 300 2018
Chrysler 300.

Increase over predicted residual value: 49.2% or $8,084

5. Volkswagen Passat

Volkswagen Passat
Volkswagen Passat.

Increase over predicted residual value: 49.3% 0r $6,400

4. Nissan Altima

Nissan Altima 2
Nissan Altima.

Increase over predicted residual value: 49.4% or $6,228

3. Chevrolet Camaro

2018 Chevrolet Camaro
2018 Chevrolet Camaro.

Increase over predicted residual value: 52.9% or $12,346

2. Dodge Charger

2017 Dodge Charger
Dodge Charger

Increase over predicted residual value: 55.9% or $11,806

1. Volkswagen Tiguan

2019 Volkswagen Tiguan
Volkswagen Tiguan.

Increase over predicted residual value: 61.3% or $8,677

Read the original article on Business Insider

One of the most popular electric cars just got thousands cheaper. Here are the cheapest EVs on sale for less than $35,000

EMBARGO 2/14/2022 4PM ET 2022 Chevrolet BoltEV 006
2022 Chevrolet Bolt EV.

  • Electric vehicles aren’t quite cheap yet, but they’re less expensive than ever before.
  • Several can be had for under $35,000, less than the average price of a new car in the US.
  • Some of the lowest-cost EVs available include the Mini Electric, Chevy Bolt EV, and Kia Niro EV.
  • Visit the Business section of Insider for more stories.

Tesla has been raising its prices consistently, but there are still more inexpensive electric vehicles on the market than ever before.

EVs have burst into the mainstream market in recent years, and as an increasing number of car companies make ambitious pledges to ramp up sales, zero-emission vehicles have steadily decreased in price. This year, shoppers will be able to choose from an array of at least 10 new EVs that cost less than $35,000.

But not all sub-$35,000 EVs are created equal. Estimated ranges for the cars listed below span 110 miles on the low end to more than 250 miles on the high end. Some are luxury offerings from Mini, while others come from mass-market brands like Volkswagen and Nissan.

Only General Motors and Tesla have sold enough EVs that their offerings are no longer eligible for the $7,500 federal tax credit that’s meant to spur sales of low-emission and zero-emission cars. This means that most of the vehicles below can be had for much less than their official MSRP, and why a few of the cars listed retail for more than $35,000.

Nissan Leaf – $27,400

2021 Nissan Leaf
2021 Nissan Leaf.

Introduced in 2010 and now in its second generation, the Nissan Leaf is one of the longest-running electric cars on the market. After an August price cut, it’s also the cheapest.

The base model gets an EPA-estimated 149 miles of range, while pricier trim levels promise up to 226 miles along with a more powerful motor.

Mini Electric – $29,900

Mini Electric
Mini Electric.

BMW unveiled the Mini Electric back in 2019 and started selling it last year. It’s the lowest-cost electric car currently available in the US, and its eligibility for the $7,500 federal EV tax credit makes the deal even sweeter.

That low MSRP means that the Mini Electric only gets an estimated 110 miles of range, but it’s aimed primarily at people who live in cities and probably don’t drive long distances. And with a claimed 181 horsepower and a 0-60-mph time of under seven seconds, it’s pretty quick.

Chevrolet Bolt EV – $31,995

EMBARGO 2/14/2022 4PM ET 2022 Chevrolet BoltEV 002
2022 Chevrolet Bolt EV.

Like the Leaf, the Chevrolet Bolt EV was one of the first EVs to go mainstream. Chevrolet recently unveiled the revamped 2022 Bolt EV, which will retail for more than $5,000 less than the outgoing model when it hits dealers this summer.

The latest generation of the Bolt EV promises 259 miles of range across all its trim levels – just like the previous generation – but sports a much sleeker design all around.

Hyundai Ioniq Electric – $33,045

Hyundai Ioniq Electric
Hyundai Ioniq Electric.

While the Hyundai Ioniq Electric’s base price is appealing – especially with the addition of a federal tax credit – the hatchback isn’t sold in every state and has less range than some of its rivals. It gets an EPA-estimated range of 170 miles.

There’s also a more expensive $38,615 trim level available with the same powertrain but an upgraded interior and tech features.

Chevrolet Bolt EUV – $33,995

EMBARGO 2/14/2022 4PM ET 2022 Chevrolet BoltEUV 010
2022 Chevrolet Bolt EUV.

The 2022 Bolt EUV is a brand new electric crossover from GM that shares its innards with the Bolt EV. Since it’s a little bigger than the hatchback, it has a slightly reduced range of 250 miles.

It affords a few inches more legroom to rear passengers than the Bolt EV and offers GM’s semi-autonomous driver-assistance tech, Super Cruise, as an option.

Hyundai Kona Electric – $37,390

Hyundai Kona Electric
Hyundai Kona Electric.

The base 2021 Hyundai Kona Electric sports a 201-horsepower motor and a respectable EPA-estimated range of 258 miles.

This month, Hyundai revealed a refreshed 2022 Kona Electric (pictured above) with a sleeker design but no powertrain changes. It hasn’t said how much the new model will cost yet.

Kia Niro EV – $39,090

Kia Niro EV 1
Kia Niro EV.

The Kia Niro EV shares a battery pack and motor with the Hyundai Kona Electric, which is no surprise given that both brands fall under the same umbrella. Specs are slightly different however, with the Niro EV getting an EPA-estimated range of 239 miles.

Volkswagen ID.4 – $39,995

Volkswagen ID.4
Volkswagen ID.4.

Volkswagen’s first EV for the US market hits streets this year, with the first deliveries beginning in March. The vehicle promises a 250-mile range and a familiar crossover shape that’s all the rage right now, so it very well may give the Tesla Model Y a run for its money.

Nissan Ariya – $40,000

Nissan Ariya front quarter_1 source
Nissan Ariya.

Another new entry to the electric-crossover market is the Nissan Ariya, the Japanese brand’s first major EV since it launched the Leaf more than a decade ago.

Details are still scant, as the Ariya isn’t set to go on sale in the US until late 2021, but we do know that the base model will start at around $40,000, there will be an all-wheel-drive option, and the longest-range model will travel up to 300 miles on a charge.

Ford Mustang Mach-E – $42,895

Mustang Mach E GT Performance Edition 03
Mustang Mach-E GT Performance Edition.

Since the 2021 Mustang Mach-E is Ford’s first major electric car – and the Blue Oval hasn’t sold very many EVs yet – the vehicle is eligible for the $7,500 federal tax credit, bringing its theoretical starting price to just over $35,000.

That starting price gets you an EPA-estimated 230 miles of range for the rear-wheel-drive model, and 211 miles for the all-wheel-drive version. There are also several other trims, including one with a 300-mile range and a high-performance model in the works that Ford claims will hit 60 mph in 3.5 seconds.

Read the original article on Business Insider

Used car prices are finally cooling off, but it still won’t be easy to buy one

car dealer
The old-fashioned way to buy a car.

  • Used vehicle prices went up just 0.2% last month after three months of record increases.
  • The price is still up more than 40% over last year, US government data show.
  • Actual relief may be a long way off due to supply challenges in the new car market.
  • See more stories on Insider’s business page.

The used vehicle market is finally showing signs of leveling off after three consecutive months of record price increases, data from the US government’s latest monthly inflation report show.

The average price for used cars and trucks ticked up just 0.2% in July, barely moving after June’s 10.5% spike was responsible for a third of the overall rise in inflation.

But even though the picture didn’t get worse for car shoppers, it didn’t get any better either – and it might not improve for a while yet.

Read more: Hot EV startups like Rivian were already struggling to get cars to market – then the chip shortage hit. 4 top execs and industry experts tell us how they’re tackling the crisis.

Depending on who you ask, average used vehicle prices are still up nearly 42% over last year (according to the Feds), or 23.6% (according to the Manheim Index), which means that used Ford Escape SUV that might have gone for $17,000 will run now you between $21,000 and $25,000.

That leaves a lot of room before prices return to familiar territory, and there are a few reasons that could take some time.

For starters, one reason prices have softened is that fewer people bought used cars last month than normally do. Cox Automotive estimates sales were down about 15% in July from the same month last year.

In other words, it’s likely there was less competition between customers to drive prices up. When shoppers do return to dealers’ lots at normal levels, it’s not entirely clear where the inventory will come from since there’s no such thing as a used-car factory.

Normal used retail supply is typically around 44 days worth of inventory, meaning that dealers have enough cars in stock to sell for a month and a half. July ended with 39 days’ supply.

The problems in the new vehicle market continue to cause ripple effects, most notably from the lack of semiconductor chips needed to make modern cars go.

“This ‘two steps forward, one step back’ path toward increased semiconductor availability and light vehicle production is likely to limit the pace at which used vehicle prices decline,” JPMorgan autos analyst Ryan Brinkman wrote in a research note.

New vehicles meanwhile continued their price increases with another 1.7% bump last month for a year-over-year increase of 6.4%, according to the inflation report. Since all used vehicles begin their lives as new vehicles, those higher new prices are likely to get baked into their eventual cost.

Another (related) reason for the constrained supply is that rental companies like Avis and Hertz are hanging onto cars longer instead of selling them into the used market.

A decade ago, 30,000 miles on a rental car was considered high. Last year, the mileage averaged around 50,000. Last month, that number hit 88,000, according to Manheim. Plus, those units sold for 6% more this year than last year.

“Even in six months, you’re still going to be facing some type of slightly appreciated prices, just because there’s so much demand that’s going unfulfilled right now,” Ivan Drury, senior manager of insights at Edmunds, said,

New-car prices will have to come down before any real improvement will arrive in the used market, he said. Until then, buyers shouldn’t hold their breath.

Read the original article on Business Insider

Sales of lifted pickups are surging. It’s the latest sign of just how crazy the used-car market is right now.

A Ford pickup modified by Lifted Trucks, a dealer in Arizona.
A Ford pickup sits on Lifted Trucks’ lot in Mesa, Arizona.

  • The car market has gone bananas during the pandemic.
  • Used and new cars are increasingly hard to find, pushing buyers to consider unusual options.
  • Lifted Trucks, a dealer of jacked-up pickups in Arizona, is smashing sales records as demand booms.
  • See more stories on Insider’s business page.

The pandemic has kicked the car market into overdrive. And it’s not just run-of-the-mill crossovers and SUVs that are selling like hotcakes.

Amid shortages on dealer lots and a voracious appetite for cars, vehicles once considered niche are entering the mainstream.

At Lifted Trucks, which modifies used pickups and SUVs with taller suspensions, beefier tires, and new wheels, business has been booming throughout the pandemic. The company has broken sales records practically every month since May 2020 across its four locations in Arizona, Chad Staples, the company’s corporate director of training and recruiting, told Insider in July.

A stew of factors brought on by the pandemic – most notably a shortage of computer chips critical for building cars – has sent new and used vehicle prices skyrocketing. Buyers unsatisfied with options on the new side are shifting toward the secondhand market, driving up prices and crunching inventories.

It all means that most used vehicles are impossible to find for a low price, and many are hard to come by altogether. The chip shortage has hit truck production hard, and used pickups have experienced some of the most staggering price increases over the last year as inventories dwindle.

A secondhand Ram 1500 cost $40,200 in June, a whopping $12,000 or 42.6% increase over the year prior, according to automotive researcher iSeeCars.com. GMC Sierra prices surged $14,000 or 41.3% over the same period.

Lifted Trucks' lot in Arizona.
Lifted Trucks’ margins are up 30% amid the spike in demand for pickups.

On top of its usual clientele, Lifted Trucks has seen a spike in customers who weren’t seeking out a jacked-up pickup, but couldn’t find what they were looking for anywhere else, Staples said. Scarcity across the country means many buyers are willing to shell out thousands extra for a 2-8-inch lift if it means they can finally get their hands on the right truck.

And with a median cost of $55,000, Lifted Trucks’ vehicles don’t come cheap. Plenty of models in its inventory will run you north of $75,000.

Read more: A GM exec turned SPAC founder reveals how a flying car startup just landed a $1 billion deal

Desperate buyers are coming from farther away than ever. Before the pandemic, Lifted Trucks’ sales were predominantly regional, with the occasional customer in nearby California, New Mexico, or Nevada, Staples said. Now 30-40% of inquiries come from out of state. One recent customer drove his trade-in from Pennsylvania.

Moreover, trucks that would’ve sat on Lifted Trucks’ lots for a while in normal times are being snatched up fast. Vehicles with unusual options packages and bizarre paint jobs – like banana yellow, orange, and neon green – don’t last long, Staples said.

With buyers willing to pay more than ever, especially for hard-to-find vehicles, profit margins are up by 30%, Staples said. Models in particularly short supply are going for astronomical prices. A GM diesel truck would’ve gone for somewhere in the $60,000 range before the pandemic – now Lifted Trucks doesn’t part with them for less than $80,000.

Lifted Trucks’ success mirrors a larger trend sweeping car buying during the pandemic. With scant options to choose from, shoppers have been expanding their budgets and going for vehicles they wouldn’t normally consider.

“Vehicles that otherwise wouldn’t be looked at might be the only vehicles on the lot,” Cameron Johnson, who runs Magic City Auto Group’s four dealerships in Virginia, told Insider. “I think everything is being considered now.”

The average price paid for a used vehicle surged almost 30% between June 2020 and June 2021 to around $26,500, according to Edmunds.

Amid the buying frenzy, Lifted Trucks is looking to expand. It’s opening up another store in Scottsdale, Arizona in the fall, before looking to build a national presence with stores in Texas, Colorado, and elsewhere.

Are you a car dealer, owner, or private seller with a story to share about what it’s like to buy and sell cars right now? Has a dealer offered to buy your used or leased car? Contact this reporter at tlevin@insider.com

Read the original article on Business Insider

Car dealers reveal the new normal for buyers, from zero haggling and non-refundable deposits to sight-unseen purchases

A man looks at his phone on the hood of an SUV at a car dealership
A confluence of factors has upended the market for used and new cars in the past year, drastically changing how Americans buy cars.

  • The pandemic has thrown the market for new and used cars totally out of whack.
  • Cars are flying off of lots as quickly as manufacturers can produce them, and prices are sky-high.
  • The buying frenzy has people pouncing on cars they never would have considered before.
  • See more stories on Insider’s business page.

Cameron Johnson, a fourth-generation car dealer with nine franchises in Virginia, was taught growing up that every morning when a dealer wakes up, their used inventory is worth less than it was the night before.

But in today’s absurd car market, that wisdom isn’t holding up.

A buying frenzy coupled with an historic shortage of vehicles on lots has sent used-car values soaring nearly 30% since last June, according to Edmunds’ automotive research. Over the last six months, Johnson’s Magic City Auto Group has raised prices consistently, and the buyers just keep rolling in.

“I’ve definitely never seen this,” he told Insider. “And I think if you had a group of the smartest people in a room a year ago, no one would have predicted this.”

A massive shortage of computer chips has devastated car manufacturing for months, choking off the supply of new vehicles to dealers. High markups and scant options from assembly lines are fueling a boom in secondhand sales, chipping away at used inventories and driving prices skyward.

Rental-car companies that pared down their fleets when travel ground to a halt in 2020 have resorted to hoarding used vehicles. Meanwhile, low interest rates, a strong economic recovery, and fluctuating travel habits have kept consumer demand high.

It’s completely upended the way car dealers do business.

Lee Walls, a salesman at Grainger Honda in Savannah, Georgia, told Insider his dealership would typically have between 300 and 400 new cars either on the lot or on their way there. Now, he’s down to about 60.

These days, most new Hondas destined for Grainger’s showroom are sold before they even hit the lot – and they’re selling at or near MSRP. The dealership has changed its policy to make deposits non-refundable since so many buyers are clamoring for new cars.

Read more: Here’s how EV startups like Rivian are tackling the chip shortage that’s wreaking havoc for major automakers

At Magic City Auto Group’s stores, too, cars are snatched up practically as quickly as manufacturers can ship them over. Margins are up and profits are solid, but the money is short-term, Johnson says.

“We’re selling them faster than we can get them, which in a normal world would sound like a great problem,” he said. But he’d readily give up the extraordinary margins for more volume, which keeps salespeople happier and creates more downstream revenue from service and trade-ins.

Everything is selling

With popular models so expensive and hard to come by, shoppers have been loosening their budgets and pouncing on vehicles they wouldn’t have considered before.

Arizona-based Lifted Trucks – which takes used SUVs and pickups, jacks them up anywhere from two to eight inches, puts new wheels and tires on, and sells them through four locations across the state – has broken a sales record nearly every month since May 2020.

Many of its recent customers weren’t seeking out a lifted pickup, they simply couldn’t find the model they were after anywhere else, Chad Staples, the company’s corporate director of training and recruiting, told Insider.

Pickups sold by Lifted Trucks in Arizona
Lifted Trucks has seen record sales and profits over the last year.

Moreover, vehicles that would’ve languished on Lifted Trucks’ lots in normal times – ones with oddball paint jobs like banana yellow, orange, bright neon green, or Tiffany blue – are selling like hotcakes, Staples said. Desperate buyers are coming from farther away than ever, with one recent customer driving his trade-in from Pennsylvania.

Amid the insanity, margins are up around 30%, Staples said.

Car owners cash in

Dealers aren’t the only ones benefiting from the insatiable appetite for used cars. Used-car owners are cashing in big on rising values.

The average price paid for a trade-in has shot up 75% year-over-year to around $21,200, according to Edmunds. Some car owners stand to make a killing, particularly if they have a vehicle they don’t need. Staples, for his part, said Lifted Trucks has bought back numerous customers’ vehicles for more than it initially sold them for.

Those with leased cars are making out like bandits, too. Peoples’ off-lease vehicles, in many cases, are worth significantly more now than the buyout price they set in their contract years earlier, meaning lessees can essentially flip their leases to another dealer for an instant profit. Johnson, of Magic City, said he helped a recent customer buy out a lease for $40,000, then took the car in on trade for $48,000.

Some people have been making monthly payments and putting miles on cars that aren’t even depreciating in value, Johnson said. “It’s bizarro world,” he said.

New-vehicle supply will only begin to improve toward the end of this year, according to forecaster LMC Automotive, so it could be quite a while before the market evens out. Johnson, for one, believes the pandemic may have changed car buying and selling permanently, as manufacturers realize they can ship out smaller numbers of vehicles with lower incentives.

“I don’t think you’re going to go back to seeing 900 cars on our lot anytime soon,” he said. “The days of coming onto a lot and seeing 50 different Explorers to choose from are far away, if ever.”

Are you a car dealer, owner, or private seller with a story to share about what it’s like to buy and sell cars right now? Contact this reporter at tlevin@insider.com

Read the original article on Business Insider

Auto dealers say today’s red-hot market is a ‘bizarro world’ unlike anything they’ve ever seen – with cars selling before they hit the lot and clunkers worth more than ever

Lincoln SUVs at a dealership.
Car dealers told Insider they’ve never seen a market like today’s.

  • The pandemic has thrown the market for new and used cars totally out of whack.
  • Cars are flying off of lots as quickly as manufacturers can produce them, and prices are sky-high.
  • The buying frenzy has people pouncing on cars they never would have considered before.
  • See more stories on Insider’s business page.

Cameron Johnson, a fourth-generation car dealer with nine franchises in Virginia, was taught growing up that every morning when a dealer wakes up, their used inventory is worth less than it was the night before.

But in today’s absurd car market, that wisdom isn’t holding up.

A buying frenzy coupled with an historic shortage of vehicles on lots has sent used-car values soaring nearly 30% since last June, according to Edmunds’ automotive research. Over the last six months, Johnson’s Magic City Auto Group has raised prices consistently, and the buyers just keep rolling in.

“I’ve definitely never seen this,” he told Insider. “And I think if you had a group of the smartest people in a room a year ago, no one would have predicted this.”

A massive shortage of computer chips has devastated car manufacturing for months, choking off the supply of new vehicles to dealers. High markups and scant options from assembly lines are fueling a boom in secondhand sales, chipping away at used inventories and driving prices skyward.

Rental-car companies that pared down their fleets when travel ground to a halt in 2020 have resorted to hoarding used vehicles. Meanwhile, low interest rates, a strong economic recovery, and fluctuating travel habits have kept consumer demand high.

It’s completely upended the way car dealers do business.

Lee Walls, a salesman at Grainger Honda in Savannah, Georgia, told Insider his dealership would typically have between 300 and 400 new cars either on the lot or on their way there. Now, he’s down to about 60.

These days, most new Hondas destined for Grainger’s showroom are sold before they even hit the lot – and they’re selling at or near MSRP. The dealership has changed its policy to make deposits non-refundable since so many buyers are clamoring for new cars.

Read more: Here’s how EV startups like Rivian are tackling the chip shortage that’s wreaking havoc for major automakers

At Magic City Auto Group’s stores, too, cars are snatched up practically as quickly as manufacturers can ship them over. Margins are up and profits are solid, but the money is short-term, Johnson says.

“We’re selling them faster than we can get them, which in a normal world would sound like a great problem,” he said. But he’d readily give up the extraordinary margins for more volume, which keeps salespeople happier and creates more downstream revenue from service and trade-ins.

Everything is selling

With popular models so expensive and hard to come by, shoppers have been loosening their budgets and pouncing on vehicles they wouldn’t have considered before.

Arizona-based Lifted Trucks – which takes used SUVs and pickups, jacks them up anywhere from two to eight inches, puts new wheels and tires on, and sells them through four locations across the state – has broken a sales record nearly every month since May 2020.

Many of its recent customers weren’t seeking out a lifted pickup, they simply couldn’t find the model they were after anywhere else, Chad Staples, the company’s corporate director of training and recruiting, told Insider.

Pickups sold by Lifted Trucks in Arizona
Lifted Trucks has seen record sales and profits over the last year.

Moreover, vehicles that would’ve languished on Lifted Trucks’ lots in normal times – ones with oddball paint jobs like banana yellow, orange, bright neon green, or Tiffany blue – are selling like hotcakes, Staples said. Desperate buyers are coming from farther away than ever, with one recent customer driving his trade-in from Pennsylvania.

Amid the insanity, margins are up around 30%, Staples said.

Car owners cash in

Dealers aren’t the only ones benefiting from the insatiable appetite for used cars. Used-car owners are cashing in big on rising values.

The average price paid for a trade-in has shot up 75% year-over-year to around $21,200, according to Edmunds. Some car owners stand to make a killing, particularly if they have a vehicle they don’t need. Staples, for his part, said Lifted Trucks has bought back numerous customers’ vehicles for more than it initially sold them for.

Those with leased cars are making out like bandits, too. Peoples’ off-lease vehicles, in many cases, are worth significantly more now than the buyout price they set in their contract years earlier, meaning lessees can essentially flip their leases to another dealer for an instant profit. Johnson, of Magic City, said he helped a recent customer buy out a lease for $40,000, then took the car in on trade for $48,000.

Some people have been making monthly payments and putting miles on cars that aren’t even depreciating in value, Johnson said. “It’s bizarro world,” he said.

New-vehicle supply will only begin to improve toward the end of this year, according to forecaster LMC Automotive, so it could be quite a while before the market evens out. Johnson, for one, believes the pandemic may have changed car buying and selling permanently, as manufacturers realize they can ship out smaller numbers of vehicles with lower incentives.

“I don’t think you’re going to go back to seeing 900 cars on our lot anytime soon,” he said. “The days of coming onto a lot and seeing 50 different Explorers to choose from are far away, if ever.”

Are you a car dealer, owner, or private seller with a story to share about what it’s like to buy and sell cars right now? Contact this reporter at tlevin@insider.com

Read the original article on Business Insider