Car-buying tips for July 4 weekend: Get ready to compromise as chip shortage limits options, raises prices

Consumer Reports’ best 2021 vehicles under $35,000American automakers aren’t the dominant brands in 2021 Consumer Reports Top Picks list.USA TODAYIn the age of seemingly endless options for cereal, condiments and candies, choice is often taken for granted.But these days, choice is a luxury when it comes to buying a new or used vehicle.With the global semiconductor chip shortage hobbling automotive production, vehicle availability is constrained and prices are soaring as automakers are struggling to keep up with demand.The upshot for consumers shopping for a new or used vehicle during the July 4 holiday weekend is that flexibility is paramount. That is, embrace the Rolling Stones philosophy: You can’t always get what you want.Chip shortage hobbles availability“The No. 1 thing – and it will be really obvious when people show up at the dealership lot – is there simply won’t be the selection you’re accustomed to,” said Ivan Drury, analyst at car research site Edmunds.Consumer Reports: These are the 10 most and least reliable 2021 cars, trucks and SUVsGoodbye, V6: The reasons why six-cylinder engines are on their way out in most new carsIn other words, dealers are likely telling the truth when they say they don’t have what you want.In fact, in some cases, “they’re parking the employees’ cars in the showroom to make it look fuller,” Drury said.Here’s what you need to know if you’re in the market for a new or used vehicle:You may not be able to get the ride you wantQuite simply, inventory has evaporated for the hottest models.The number of new vehicles on dealer lots fell 55% from June 2020 to June 2021, according to car-buying site CarGurus.“It’s not just Dealer A,” Drury said. “It’s Dealer B, C, D and everyone in between.”For example, supplies of the Toyota RAV4, the bestselling SUV in the country, have fallen by 72% from January to June, according to Edmunds. Supplies of the Ford F-150 pickup, the most popular vehicle of any kind, have declined by 66%.That means your ability to get the precise color, trim line or powertrain you want may be limited.“They literally just don’t have new inventory, especially when you look at some of these popular vehicles,” Drury said. “It is not just remarkable. It’s insane.”Used Cars In High Demand.Normally I would keep 30-50 trucks in stock. Right now, I have a hard time keeping 20,” Chris Spears said Wednesday. “The problem with the chip shortage is that new car dealerships are having to sell used cars because they can’t get new inventory.”Doug Engle, Ocala Star-BannerFor example, Prestige Auto Sales in Ocala, Florida, is typically able to carry 30 to 50 trucks at a given time but was having a hard time keeping 20 on the lot in May, owner Chris Spears said.”We’re having to spend more time each and every week to find the few available cars that fit our price band for customers,” Spears said.Get ready to pay upFor the second quarter, the average price paid for new vehicles was $40,827, up 5% from a year earlier and notching a new record, according to Edmunds.To be sure, price increases have leveled off in recent months, if only because automakers don’t have enough production capacity to produce high-end trim lines, Drury said.But for vehicles they do have, discounts – known as incentives in industry parlance – have largely disappeared. The Jeep Wrangler had an average list price of $1,887 below the manufacturer’s suggested retail price in January. In June, the list price for the SUV was $42 above the MSRP, according to Edmunds.The Ford Escape SUV had an average discount of $3,897 in January. That fell to $817 in June.Customers simply can’t expect the same type of discounts or options they may have gotten in the past.“Reset your expectations or unlearn your prior experience,” Drury said. “Unhinge your brain from what happened last time.”Used vehicles aren’t much cheaper than new onesThe average transaction price for used vehicles in the second quarter was $25,410, up 11% from the first quarter of 2021 and up 21% from the second quarter of 2020, according to Edmunds.In many cases, the price gap between new and used vehicles has evaporated.In fact, the average lightly used car cost only 3% less than a new model of the same vehicle in the first half of June, according to car research site iSeeCars.“Dealers may think used car buyers are willing to pay more for the instant gratification of a lightly used vehicle they can drive right off the lot rather than waiting for a new one,” iSeeCars executive analyst Karl Brauer said in a written analysis of the market.Don’t expect new vehicles to have all of their standard featuresIn some cases, to keep production moving, automakers have been removing some features from their vehicles.General Motors has temporarily removed stop-start engine technology from its full-size SUVs to conserve chips. It is also removing high-definition radio from some of its Chevrolet Silverado and GMC Sierra pickups.“You’re seeing midyear changes to a vehicle,” which are rare, Drury said.In essence, there might be a reason that you’re seeing more Chevy pickups than Ford F-150s, which Ford has been parking temporarily in massive outdoor lots while it awaits more chips. Be aware.Think about putting off your purchaseIf you don’t need to buy now, it might be worth waiting.“Just take that step back and don’t worry about it,” Drury said. “You’re doing everybody a favor if you don’t (buy) unless you have two trade-ins instead of one.”Don’t expect to get a car if you drive out of stateWith inventories limited, nearly 10% of vehicle shoppers are traveling out of state, according to a recent survey by Cars.com, an online automotive marketplace. That includes new and used buyers.But Drury said that shoppers should proceed cautiously because in some cases they’re being turned away when they travel afar.“Dealerships will straight up say: ‘If you’re coming from out of town, if you’re coming from far away, we will not sell you this vehicle unless you have a trade-in,’” he said.Why? Because dealers make much of their profit based on servicing vehicles.They’re thinking, “I’ll never see you again,” Drury said.Consider a sedanPassenger car sales have been declining for years, going from about half a decade ago to 1 in 5 in 2020, according to Edmunds.While automakers have responded by discontinuing many cars, such as the Ford Focus and Chevrolet Cruze, you can still generally find a sedan to buy more easily than an SUV or a pickup in this supply constrained market.“You drove one before,” Drury said. “Your life wasn’t so bad. How often do you actually use that compromised crossover space that doesn’t actually hold a much as you think?”Contributing: Doug Engle of the Ocala Star-BannerYou can follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey and subscribe to our free Daily Money newsletter here for personal finance tips and business news every Monday through Friday morning.


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