Rob Robinson spent an entire year looking online for a new Ford F-150 XL with two must-haves.
“I needed a long bed for hauling and an extended cab for dry, safe storage,” Robinson, 53, said.
He finally found what he wanted, but the resident of Lake Worth, Florida, had to travel 650 miles to Cumming, Georgia, to get it.
His situation is not unusual, said Matt Jones, industry education expert with TrueCar, an online car-buying platform. Data from TrueCar shows that “more people are turning off search filters and searching the entire nation.”
It wasn't supposed to be this way. After last spring when the computer chip shortage sent auto prices soaring, experts expected that supply-demand imbalance to ease by this year. Now those bets are off.
“As the industry works tirelessly to ‘right the ship,’ the surge of Covid-19 cases from the Delta variant in several Asian countries is further delaying a return to normal auto production and keeping the supply of vehicles artificially low,” Jones said.
That means sky-high consumer prices for vehicles (new and used, as well as rental cars) are likely here to stay — at least into the middle of next year and possibly into 2023, said Brian Moody, executive editor at Autotrader.com, an online marketplace for car buyers and sellers.
This has consumers scrambling, especially if they have their hearts set on popular cars and are looking for specific features.
Jennifer Proctor found her vehicle closer to home than Robinson, but it wasn’t exactly her ‘dream car,’ either.
“We’re a Volvo family but didn’t want to spend $80,000-something on the one we wanted,” she said.
Proctor decided on a Toyota Highlander Hybrid, which was readily available at one of the larger, more established dealerships just down the road from where she lives with her family in Falls Church, Virginia.
“I hadn’t bought a new car since 2009 when you could pick the color you wanted, the interior, and you’d get it in a couple of days. With the Highlander, there was no room for negotiation and it was, ‘better buy it now,’" she said. "In fact, when I was filling out the paperwork, there was someone else interested in buying it.”
Cars are flying off the lots — fast.
Roughly a third of vehicles are selling within one week of hitting dealerships, according to Edmunds.com, an automotive research firm. Many are even selling the same day as delivery. And they’re going for full sticker price, if not more.
“The percentage of vehicles being sold in excess of [Manufacturer's Suggested Retail Price (MSRP)] has more than quadrupled year over year,” said Jones.
With average transaction prices for new cars averaging about $43,300 (10% higher than a year ago), according to Edmunds.com, more consumers are looking to the used car market.
Chintan Talati of Orange County, California, is one of them.
After calling dealerships all around the country and discovering that his first choice — a Kia Telluride SUV — was going for $10,000 to $15,000 over MSRP, and his second choice — the Chrysler Pacifica plug-in hybrid - had waiting lists of 50-100+ customers, he did the unthinkable.
“I bought a used minivan, which I never thought I’d do,” he said.
Buying a pre-owned car offered Talati somewhat of a reprieve (and he did score a low interest rate of 2.34%), but not much. After all, used cars are selling for about 20% more than last year, averaging about $26,300, according to Edmunds.com.
Elevated values has dealers hustling to get used cars on the lots — any way they can.
“They’re sending hand-written notes to prospective sellers, and even driving around town looking for cars to buy from individuals,” Moody said.
“Everybody’s light on cars,” Jones said, including car rental car companies, who are now struggling to rebuild their fleets after selling off hundreds of thousands of cars when the pandemic hit and business tanked.
“When demand started coming back last winter, rental car companies found themselves with more customers than cars,” so they could name their price, said Jonathan Weinberg, founder and CEO of AutoSlash.com, a car rental website.
This is prompting travelers to rethink their vacation planning as we approach the holidays.
“People used to book their airfare first, then their hotel, and eventually their car rental,” Weinberg said. “Now, they’re booking the car first and working their way backwards. It’s no longer an afterthought.”
Personal Finance Journalist Vera Gibbons is a former staff writer for SmartMoney magazine and a former correspondent for Kiplinger's Personal Finance. Vera, who spent over a decade as an on air Financial Analyst for MSNBC, currently serves as co-host of the weekly nonpolitical news podcast she founded, NoPo. She lives in Palm Beach, Florida.