Being in the market for a new car right now is challenging, to say the least.
Heading into the long Labor Day weekend, transaction prices remain elevated. While the three-day stretch normally marks when dealerships hold big sales events to clear their lots and make room for next year’s models, low inventory and strong consumer demand mean fewer incentives are needed to sell cars.
“It’s a tough environment,” said Kelsey Mays, assistant managing editor for Cars.com. “I don’t think it’s a surprise to shoppers, but that doesn’t make the situation any easier.”
An ongoing global shortage of microchips — key components needed for today’s autos to operate — has impacted manufacturers’ production of new vehicles, which has translated into demand outpacing supply. The result has been fewer discounts being offered across the board, with some autos selling for more than sticker price, and demand spilling over to the used-car market.
Dealership inventory is roughly a third of what it was pre-pandemic, according to research from J.D. Power and LMC Automotive. The average time for a new vehicle to sit on a dealer lot before being sold is an estimated 26 days — the first time on record below 30 days. Two years ago — pre-pandemic — it was 62 days.
The average price paid for a new car is $41,378, according to J.D. Power. The average discount — if offered — is about 4.3% of the sticker price. That’s less than half what it was a year ago.
Switching to the used-car market may not offer much of a reprieve, either. The average price paid for a used vehicle is $27,272, according to auto-research firm Edmunds.com. That’s 25% more than the year-ago average price.