Car Time – October 2022

    The chip shortage for new vehicles still raises questions with no real answers as things continue to change. New vehicles, if any are on a lot, are selling above MSRP (Manufacture Suggested Retail Price), and used ones are valued higher than usual, due to the shortage.
    Many people in the U.S. shop for new vehicles by going to a dealer, picking one they like and driving off the lot the same day, which isn’t a realistic option these days.
    There are, however, some ways to avoid dealer mark-ups. One is to find a dealership that honors the MSRP; another is to order a vehicle and option it however one pleases. The downside is waiting for it to be built and delivered to the dealer. Not every dealership will allow this tactic of avoiding mark-ups, stating it’s their policy.
    Another imminent issue dealerships will face is a shortage of lease returns. Under normal circumstances, a leased vehicle would be returned to the dealership and the vehicle would be serviced and prepped for sale. But since used cars are valued higher than before, people leasing are in an odd place. Some are actually able to sell their lease to a company such as CarMax and pocket some money as a result.
    Certain manufactures won’t allow this. For example, a Hyundai lease is not allowed to be sold to a third party, such as CarMax. The lease will have to be returned to Hyundai or bought out. This is due to the fact the lease is financed by Hyundai itself; many other brands do this as well.
    The other variable with leases right now gets put into play because some people may choose to buy it out since the market is scarce. All of this results in fewer lease returns for dealers to sell.
    Moving forward, manufactures are starting to take notice of things that need to change. Electric Vehicle (EV) brands have notoriously shifted the way people purchase cars by doing everything online, with customers picking the vehicle up at a store or through home delivery.
    Ordering your car may become a norm in the future. Doing so would contrast with the traditional U.S. way of purchasing. European and Asian countries are already using this alternative, since some dealers there do not have the real estate to keep a large inventory of vehicles on their lots.

Xavier Estrada can be reached at xavier@orindaclassiccarcenter.com.