The pandemic upended just about everything, including car buying. Prices have soared for new and used vehicles, and some dealerships are even trying to charge desperate buyers more than the vehicle's sticker price — a practice that is now getting them unwelcome attention from Ford and GM. In addition, the typically very hands-on process of buying a car has changed at many dealerships. Thinking about buying a car soon? Here are some new rules of a changed game.
As the pandemic has lingered, supply-chain issues and chip shortages have taken a huge bite out of inventory. With fewer cars on lots, dealers haven't had to offer much — if anything — in the way of discounts. According to J.D. Power, 89% of new vehicles are selling near or even above the sticker price compared with 12% in December 2019, before the pandemic. But the dealerships charging buyers above sticker price are on thin ice with Ford and GM, which have said they will hold back on supplying those dealerships with new cars if they don't fall in line. While dealers technically don't have to adhere to a vehicle's sticker price, automakers say that dealers charging more than that can damage their reputation. Ford says 10% of its dealers are charging above sticker.
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Naturally, given that discounts on new vehicles are sparse, budget-conscious car buyers are turning to used cars to save. The problem: That's making competition for pre-owned vehicles fierce, and driving up prices. Car and Driver says the average used car price recently hit a shocking $27,500, up 35% from the beginning of 2021. Some popular vehicles are even selling for more used than new since they're so hard to find.
Like many other businesses that have limited the number of customers that can be onsite, some dealerships still restrict car shoppers to a set number of people at a time in order to reduce contact.
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A CarGurus study in April 2020 found that car shoppers were more open to buying online and more likely to prefer it since the spread of COVID-19. Car dealers heeded the call. "Our websites will be packed full of information about the vehicles so there will be less need for face-to-face contact," Michael Lowe, CEO of Car Passionate, said at the time. "We've added videos as well as virtual test drives so that customers can get a feel for the car without being present."
Yet another option for getting a closer look at a vehicle without visiting in person is a FaceTime tour of a car. "You can call most dealerships and a sales representative will use FaceTime to take you through the car," said Nathan MacAlpine of Los Angeles-based CarMate, who urged car buyers not to be shy about asking for this.
In some places, you may still be able to simply drive onto a lot and wander around, but other dealers are requiring a far more structured process. "You have to book an appointment first, and all of the showroom doors will be locked," MacAlpine said. "You have to call them first and schedule a viewing, and then somebody will come out when you arrive and let you in."
It may seem like a minor change, but many car lots and showrooms that used to be open until 9 p.m. or 10 p.m. dramatically slashed their hours. "Most dealers are closing at 5 to 6 p.m. because they're understaffed," MacAlpine said.
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Who among us hasn't grazed a bit on the free baked goods often provided in car showrooms? The free coffee was also a nice perk to get you through the long negotiation process, contract signing, and more. But Sean Pour, co-founder of car-buying service SellMax, said this little nicety has been removed from some dealerships. "Many of the new car dealerships we have partnerships with are no longer putting free food out ... which they used to do pretty much every morning," Pour said. “They feel it's too big of a risk.”
If you want to get behind the wheel of a car and test-drive it in person before buying, that's generally will be allowed, but the salesperson might not join you this time. "They give you the keys to a vehicle and you drive around the block on your own," MacAlpine said.
If the vehicle you're considering is close, you may even be able to ask that it be brought to you for a test drive, said LeeAnn Shattuck, owner of The Car Chick, a car-buying service in Charlotte, North Carolina. "Many dealers have started doing 'home test drives' within a certain geographic radius during the pandemic, and will bring the vehicle to your house," she said. "The salesperson does not go with you on the test drive, since you can't social distance inside a car."
Many dealers sterilize vehicles before and after test drives. "Seat and steering wheel covers are placed in the vehicle before test drives, and after the test drive is completed, sanitizing solutions are used to wipe down all touch point areas," said Charles Breen, senior service manager for Quirk Auto Dealers, which operates throughout New England.
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Nearly every phase of the car-buying process can now be completed remotely, including signing on the dotted line for the purchase. "Instead of signing paperwork with the customers in person, we are allowing them to sign online forms using DocuSign or HelloSign," said Pour, of SellMax.
In addition to digital document signing, the updated car-buying process often involves making payments digitally. "We have the capabilities to accept digital payments and are encouraging all customers to pay digitally," Breen said. "We can send invoices right to a customer's phone, where they can pay by debit or credit card, which prevents unnecessary contact between our customers and employees."
In the past, dealers often balked at home deliveries of purchased vehicles, for a variety of reasons including paperwork challenges and lack of resources, but this, too, is becoming standard. Quirk, for instance, is pushing contact-free home delivery rather than asking customers to come to showrooms to pick up their vehicles. "We put the customer vehicle onto a flatbed and deliver it to the customer's house," said Sean Western, director of marketing. "A sales consultant will deliver the vehicle, answer any questions, and explain how certain features work."
Dealers are also allowing customers to unload trade-ins from afar. "You can even shop your trade vehicle via email," said Shattuck, of The Car Chick. "They're doing it now for most online car shoppers due to the pandemic. Some dealers have added a questionnaire on their website for you to complete, asking very detailed questions about your trade vehicle, and some will request that you send in pictures of the car, both inside and out." The quote may be lower than it would have been if the dealer were able to inspect the car in person. "They're taking a risk that the car is not actually in the stated condition," Shattuck said. "So it's important to shop your trade around, as well, to get the best selling price."
For those who don't want to go through the hassle of shopping for a car amid the coronavirus, there are companies that provide concierge-style shopping services, such as CarMate in Los Angeles and The Car Chick. "Clients call us, and we do all of the work and they've always stayed at home," MacAlpine said. "I do all of the legwork, crunch the numbers, send customers pitches, and negotiate the final deal for them."
