Where Are The Cars? Buying A Car In The COVID Era

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In the Pacific Ocean, a mile from Los Angeles Harbor, a cargo ship holding 2,000 cars lay waiting for almost a week. Right now, the US is awash in cars, but driving is down precipitously, and most people neither need nor are in a position to buy a car right now.

Enter…my parents. My parents are thrifty, responsible people who buy a new economy car approximately once per decade and drive it into the ground. Their two cars, both purchased during the (GW) Bush administration, boast nearly 450,000 miles between them and a lengthy list of dents and quirks that, fortunately, do not prevent them from being driven. But their days are numbered.

Because I love negotiating and getting deals, my parents generously delegate the privilege of negotiating their decennial car purchases to me. Pre-COVID, we found a good deal on a new Honda Accord, but they developed cold feet because the car they planned to replace “still had some miles left” and only needed an oil change “every three weeks”. They were also turned off by the experience at the dealership, which was as unpleasant (long waits, ignored repeatedly) as dealership experiences have been since the beginning of time.

Unfortunately, their main car has reached the end of the line, so I began the car search about 10 days ago. With articles about cargo ships filled to the brim with cars, zero-percent financing deals almost everywhere, and car sales cut in half, I figured this would be a fairly easy process, particularly with many dealers advertising “no-contact” auto sales. I was wrong.

I started by contacting almost every Honda dealer within 40 miles (there are many). Several of them advertise “no contact” auto sales experiences, so I figured this would be pretty similar to negotiating a traditional car deal,[1] minus the annoying time at the dealership.

The first steps were promising, with a few dealers replying with offers. Unfortunately, the offers were all terrible - sticker price (no one pays sticker price) or small discounts that were at or above average for our market.[2] When we tried to negotiate, we received no (or automated) responses. Calls to dealers generally went unanswered. We also tried Costco’s Auto Program to no avail - the dealer never responded. Anecdotally, I have heard others cite examples of dealers asking for more than sticker price, which is extraordinarily rare outside of extremely hard-to-get vehicles.

This all seemed quite strange - if there are literally cargo ships full of cars in the ocean being told to wait at the port, and very few people are buying cars, why aren’t the dealers jumping to sell?

I could only come up with a few theories:

  1. Dealerships are likely understaffed or have furloughed many employees, meaning remaining salespeople are very busy

  2. Dealerships earn much of their profits based on volume incentives from manufacturers (not profits from individual car sales) and so have little reason to want to make a sale to someone who wants to negotiate a low price

  3. Dealerships know it is not easy to buy a new car right now (since many other dealerships are closed) and are just driving a hard line and demanding higher prices

Ultimately, if dealers are going to try to drive a harder bargain during a pandemic, we’re simply going to hold off on a new car. If you are in the same boat, you should wait too - ultimately, either shutdowns are going to go longer and dealers will need to make sales (and may need to reconsider the customer-unfriendly practices that make buying a car so unpleasant in the first place), or things will get back to normal and it will be easier to get in touch with a dealership and make a deal.

And if you absolutely need a car right now? Consider used car options - just some random searches turned up Carvana (which is dedicated to used cars), but there are many, many good sites with used car listings, including Cars.com and CarGurus. We have never purchased a used car ourselves through these sites (so these are not recommendations), but we will probably go this route if it’s necessary.

For now, we will continue to play the waiting game…

I hope this has been helpful. If you liked it, please share it with a friend! Also, please send me your feedback, requests, and success stories.

[1] I’ll discuss my steps to get the best price on a new car in a future post.

[2] How do you find out what’s an average or good deal? We like to use TrueCar’s market average charts for individual models/trims, and also go to the Edmunds prices paid forums. r/carbuying is useful as well.