If you have flipped through channels lately you have likely been met with ads for Memorial Day sales at car dealerships. And while Memorial Day weekend is known for steep vehicle discounts, this year’s sale will take some extra consideration.
The average used vehicle is around $28,000, and the average for a new car is even higher at close to $47,000, according to Kelley Blue Book. But this high vehicle cost, due in part to continued supply chain issues, doesn’t mean that a deal is out of reach — just be ready to make some preparations ahead of time.
This year’s Memorial Day sales will be limited
Historically, Memorial Day has been one of the best times to find a great car deal. But this year will likely leave drivers with less luck when it comes to making a purchase.
Limited vehicle stock
The industry is still unable to catch up with the consumer demand. Dealers are selling vehicles at lightning-fast speed due to the small number of available vehicles. Cox Automotive reports a 1.5 million decline in vehicle supply for March compared with 2021.
As factories halted production, the shortage of semiconductor chips led directly to fewer vehicles at the dealership. This shortage created a time of increased need and low supply. And when shopping this Memorial Day weekend, you will likely still be met with less vehicle availability.
With fewer vehicles available, dealers are likely not feeling as much pressure to sell vehicles as they would have in years past. With so many drivers desperate for cars, they’re not as motivated to offer incentives like cash back or rewards.
In prior years, this holiday weekend was full of different incentive options, but dealers won’t really need them to sell vehicles in 2022. J.D. Power notes in its 2022 forecast that incentive spending per unit is expected to reach $1,044 — down from $3,334 just one year ago.
Less vehicle supply also means more drivers vying for the same vehicle. This increased competition will likely make getting your dream vehicle more of a challenge. Many buyers are ready to spend over the asking price to get the vehicle they want before another driver does.
This greatly shifts the playing field and gives dealers the upper hand when it comes to pricing. The average price for a used vehicle is selling for around 28 percent higher than this time last year. And with a 2021 Cox Automotive survey finding that 42 percent of buyers are willing to pay over MSRP it’s almost guaranteed you’ll face a good deal of competition.
How to get the best deal despite limitations
If you are set on driving away with a new set of wheels following the upcoming Memorial Day weekend, there are a few tips you can follow to get the best deal — even with fewer vehicles available on the lot.
Test drive before the weekend
One way to save time and ensure you’re in and out of the dealership before the competition is to test drive ahead of time. This way you can walk in ready to buy rather than feel pressured to sign a deal on a car you aren’t completely sold on. To arrange for a test drive, research cars online then contact your dealer to arrange an appointment in advance.
Shop outside your ZIP code
Although the pandemic led to vehicle supply challenges, it also hastened the shift towards online buying. Take advantage of this new opportunity to see if there are vehicles available outside of your area.
Buying a car online is a similar process to that of an in-person purchase and you might save some extra cash along the way. And with some areas offering better prices, it might be worth your while to travel to a city with more affordable prices to find your next vehicle.
Be flexible with your vehicle choice
With fewer vehicles lining dealership lots, now could be a great time to expand your horizon when it comes to vehicle model, size and style. Most drivers tend to be narrowly focused on a particular make or model, so flexibility could mean getting a vehicle while others don’t. Consider checking out Bankrate’s 2022 winners for the most reliable vehicles when shopping.
Purchasing a vehicle is a large financial decision. After considering the changes to this year’s holiday weekend, decide if it is truly worth the price and effort. If you are not actually saving money by buying this Memorial Day weekend, and you can afford to wait, being patient may be a better bet. Consider sitting out the holiday shopping surge and instead wait for more vehicle inventory to become available. You may be met with shorter lines, more options and potentially better prices.