Shortages of new vehicles has been a major problem the last few months due to a severe Microchip shortage as we’ve talked about on the air for some time. So, how does buying out of a dealer's inventory affect your deal versus buying out of the dealer's stock?
When you make the decision to purchase, you get all excited about that new car, research it until your eyes get crossed and now you are ready to go to a dealership. You have the perfect vehicle envisioned and you get to the dealership and they do not have it. Now, what do you do? This has happened much more in recent months.
Some people are willing to be flexible, while others want exactly what they want. Everyone has hot buttons; it may be color, equipment, engine/transmission, maybe even an interior color. The problem is no dealer can afford to stock every combination available on a particular model.
Today, dealers stock cars based on recent history. The equipment packages that sell the fastest are re-ordered first. Dealers know what colors sell best, which trim packages sell best, and which engine/transmission combinations sell best, and all this information is available with the push of the button.
If you visit a dealership and can't find exactly what you want, you have four choices: you can purchase a vehicle already ordered and in transit, get the dealer to special order what you want, they can find it at another dealership and get it for you, or you can make a choice out of their inventory. Let's look at each option.
Buying an inbound vehicle
Since Covid-19, now the Microchip shortage, many dealers are selling vehicles before they arrive. That is why dealer lots look so empty right now. Cars come off the convoy truck and it already has someone’s name on it.
Dealers have gotten really good at looking at the vehicles in the pipeline when someone has specific wants. They will know everything about the car, it’s equipment and they can give you the Car Pro price before the vehicle arrives. Normal arrival time for incoming vehicles could be two days to six weeks.
Given the current climate, this is probably the best way to get that vehicle you’ve been dreaming of.
Ordering a car
The good dealers are always willing to order for you, the greedy ones don't really care about doing this, they want that 'today deal' and if they can't have it, they'll send you down the road. A couple of things you need to know about ordering are that it takes time-and the length of time can vary greatly depending on the automaker. Most can get the vehicle you want in six to eight weeks, but I have also seen it take 90 days or more depending on availability of the car you choose. The size of the dealership can have a lot to do with this too if it is a 'hot' car.
Since the recent shortages, automakers are prioritizing sold orders and building them first, which has shortened the time from order date to delivery.
Letting the dealer get the car from another dealership
Dealers trade amongst themselves constantly because as I said earlier, no dealer can stock everything. You need to know that if you choose to go this route, it will most likely cost you money. With most brands, the original dealer receives the holdback money from the factory and often does not pass that on to the dealer needing the car. In many cases, this is 3% of the window sticker price and can have a huge impact on your final pricing. Then there are transportation costs. Most dealers pay a service to transport the car from one dealership to the next and that can have an impact on your price. The farther away the car is, the more it costs to get it to you.
Dealer trades have become more difficult as of late. If one dealer needs a vehicle another one has, it will take a like vehicle to make the trade work and sometimes, that is just not possible.
Buying from dealer's current stock
This is the least expensive way to buy a car. The dealer has the most incentive to give you the best price, even with the shortages. If you find a car that is close to what you had your heart set on, changes can be made. Let's say you find the perfect car except it has a cloth interior and you wanted leather. Today, leather can easily be added to any vehicle. The same is true of navigation systems, moon roofs, DVD players, wheels, etc. If you decide to adapt the car to fit your desires, be sure to see what it will look like when finished. Ask if the item being added is factory or aftermarket, this can affect quality and warranty. Add-on items generally cost a little more than the same option from the factory but is often much cheaper than the dealer having to get the car from another dealer.
In summary, if you can buy out of a dealer's stock, you'll save money. However, you are spending a lot of money, so make sure you are pleased with your choice.
Editor's note: This article was late updated on June 29, 2021 with new information.