People looking for something productive to do during the dark days of winter and the continuing COVID lockdowns might want to go shopping for a new car because there are some great deals out there.
Buyers at this time of year typically go for the new-to-me new car rather than a straight off the lot new vehicle, one analyst noted. However, production issues due to ongoing COVID-19 pandemic and now weather-related shutdowns have tipped that strategy on its head.
“Used vehicle sales tend to peak this time of year versus new car sales which usually peak in December when big end-of-year discounts entice consumers to dealership lots,” said Nick Woolard, Lead Industry analyst at TrueCar.
“This year popular used vehicles will likely still fetch a premium price as new vehicle inventory challenges continue, resulting in about a 10% increase in used vehicle list prices when compared with last year.”
Higher used vehicle values help new vehicle buyers
“On the flip side, that means you can still get some of the highest values on your trade in, particularly if you own a three- to four-year-old, low-mileage truck or SUV that can be used toward the purchase of your new vehicle,” he noted.
Popular used vehicles currently holding their values best include relatively new full-size trucks, Woolard said. The demand for these used vehicles often give consumers a better shot of getting a good deal on the new side because there is a relative shortage of inventory on the used side of the retail car buying equations.
“If you’re looking for a unicorn new car deal, start with the remaining 2020 models still in inventory. While 2020 model year vehicles are scarce and only make up about 20% of all new inventory, if you find one on the lot that meets your needs you’ll want to move quickly before another buyer gets to it,” said Woolard.
He emphasizes moving quickly because not only are there shortages on the popular used models, some well-equipped new vehicles in high demand are also coming up a little short on dealer lots. So if you can’t find that unicorn deal, you may have to pay a bit more than expected for a used option, but it may be the only option.
Variety of factors at work
Vehicle prices are subject to a variety of things during February, Woolard said. Traditionally, by February new-car dealers get more incentives to reduce their inventory of previous model year new cars. However, shortages and delays due to the pandemic as well as semiconductors now have a third element in the mix: the weather.
Much of the country has been hampered by severe weather, but no place worse than the state of Texas. Snow and a record cold snap and snow shut down much of the state. Impassable roads, a loss of electric power for millions of residents and manufacturers.
General Motors, Toyota both build their high-profile and high-profit full-size SUVs and pickups in the state. However, shutdowns in Mexico for a variety of makers, including the aforementioned GM, Ford, Audi, Volkswagen, Mercedes and more have resulted in lost production.
Woolard told TheDetroitBureau.com recently TrueCar is still looking at how this new factor could affect vehicle sales and deals to move vehicles in February.
That means in certain parts of the country, consumers might be able to take advantage of the fact that many sales managers might be willing to make better deals on new-car prices to meet monthly sales quotas. These are deals that otherwise would not have been considered if not for the storm.
Best deals used and new
Woolard said TrueCar looked at popular used vehicles at a model level and curated those that have experienced a significant month-over-month drop in the list price indicating a good deal.
Among the vehicles looking good right now: Chrysler PT Cruiser, Honda Clarity, Mitsubishi Lancer, Nissan Leaf, Hyundai Accent, Volvo S90, Mini hardtop, Honda Insight, Toyota Corolla iM, Audi A3 and Toyota Yaris.
Woolard said that those looking to lease can find good deals on the Subaru Forester, the Nissan Sentra the Honda Accord, the Kia Sorrento and the Toyota Corolla. Finance deals are looking good for the Ram 1500, the Subaru Crosstrek, the Ford Escape, the Jeep Grand Cherokee and the Honda HR-V.