Car buyers advised to skip negotiating, pay sticker price during entrenched shortage

Chip shortages, factory shutdowns due to COVID outbreaks, and a lack of used car inventory from rental companies are all combining to create supply challenges on dealer lots nationwide.

However, March is being seen as one of the best months in car sales in history for both the new and used car markets, and dealers have been able to retain higher profit margins.

News publications such as CNN are reporting that buyers should be prepared to pay sticker prices in order to buy the car they want, and this type of market will be around for a while.

New car performing similarly

In the new vehicle market, average transaction prices at the end of March 2021 tailed off slightly but remained well above $40,000. With less inventory available as sales exceed the pace of production, not only can dealers expect to see average transaction prices increase, but an era of car buyers paying the sticker price could be here.

Ali Faghri, analyst at Guggenheim Securities: “This is near perfect operating environment to be an auto dealer. Demand is incredibly robust, you’re not only selling a lot of cars right now, but at record margins.”

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