Drivers can now get historically huge discounts on cars – dealers admit it’s ‘bad for them’ but you could get more than $11k back

AUTOMAKERS were unable to meet demand during the pandemic due to chip shortages – now they cannot sell enough vehicles quickly enough.

Several automakers are so desperate to move stagnant inventory that discounts can reach as much as $11,000.

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Before the pandemic, car production had reached its equilibrium – supply was in line with demand and everything was fine.

However, when the crisis shook the world, production slowed dramatically as car manufacturers struggled to obtain semiconductor computer chips from their suppliers.

Then the opposite happened – demand was high, but manufacturers struggled dramatically to satisfy customer needs, creating a “rarity” complex with some highly sought-after brands and models.

Sometimes the New York Times reportedpeople would obtain a vehicle that was in high demand and sell it for an even higher price to make a profit.

Four years later, it appears that the production balance is again out of balance and there are now too many vehicles compared to demand, creating a surplus.

There are a multitude of reasons why people don’t buy new cars, although the main reason is affordability – people are back to work, but the effects of high inflation and the cost of living are keeping Americans away from dealerships.

Especially due to higher insurance premiums and gas prices nationally.

Edmunds, an industry market researcher, determined that even for used cars, the average interest rate for a loan was 11.6%, with an average monthly payment of $735.

Which means that without discounts or incentives, most buyers simply can’t afford a new car.

To help encourage people to buy new cars, Wes Lutz, owner of Extreme Dodge of Jackson, Michigan, said Stellantis is offering discounts on some models of up to $11,000.

Some models, like the Dodge Durango, receive manufacturer rebates of up to $3,600.

The Ford Escape only has a $5,500 discount if it’s a certain trim that’s in the dealer’s inventory.

He said this directly hurts his business, but recognizes how it can be good for his customers.

“It might not be good for me or the manufacturer, but it’s definitely good for the consumer,” he said.

He predicts the market is headed for a dramatic surplus.

“It looks like we may be going back to incentives and overproduction,” he continued.

“It’s not there yet, but it’s getting close.”

Expert car rental advice

Ray and Zach Shefska, the father-son duo that make up CarEdge, spoke with Sun Motors USA reporter Kristen Brown in an exclusive interview about their top tips before signing a new car lease.

Leasing a car may be a more viable option for some rather than financing with an auto loan.

Leasing a car for 24 to 36 months can be attractive to many because the monthly payments are typically lower than loan payments, although there are some restrictions, such as a mileage allowance.

At the end of the lease, people can purchase the vehicle at a reduced price or they can return it to the dealership and lease another car.

Before entering into a lease, Ray offered some important tips to consider, drawn from his 40 years of experience as a sales manager at various dealerships:

1. Learn the interest part of the rent — or the “money factor” — to understand how much interest you’ll pay and how much that adds up to in total.
2. Negotiate the sales price before discussing monthly payments – the cheaper the car’s sales price, the cheaper your payments will be.
3. Accept the premise that you will always have to make a payment, so you can have a good car for a cheaper price or a smaller car for a higher price.

Read more here.

The need for incentives and discounts creates a problem for the automaker in the form of lost profits and creates a condition for buyers to only buy cars when there is a deal on the table.

They’re also good for attracting what Adam Silverleib, owner of a Honda and Volkswagen dealership in Massachusetts, calls the “desired buyer.”

“You have your ‘necessary buyer’ whose car has died or needs a lot of expensive repairs, and they need to buy a new vehicle,” he said.

“But many of these ‘interested buyers’ disappeared when interest rates rose, and now incentives are bringing some of them back.”

If you’re looking for a new car, check the manufacturer’s discounts on their website and check the offer with your local dealership.

For you, now might be the time to buy.