Car shoppers are primed to expect deep discounts on Labor Day weekend, but they just ain’t happening this year. Because they don’t need to happen, because dealerships have no incentive to deviate from their entire strategy through 2021: offer a car, possibly for thousands above sticker, take it or leave it. If you don’t, someone else will.
The Wall Street Journal talked to personnel from a number of dealers in a story published today and they basically all said different versions of the same thing.
“I’m asking myself, ‘Why am I spending so much money?’” said Adam Lee, chairman of Lee Auto Malls, a dealership chain in Maine. This September, Mr. Lee said he cut his advertising budget by 25% because attracting customers to his store is the least of his worries right now.
Or this, courtesy of the guy who runs Ram:
“We don’t have to rely on heavy discounts to move aged or bloated inventory,” said Mike Koval Jr., head of the Ram pickup-truck brand, a division of global car company Stellantis NV.
It’s been the worst time to buy a car now for a long time, and that will extend to the holidays typically associated with blowout deals. The average new car price has hit nearly $43,000 according to Kelley Blue Book — $3,200 more than in 2020. Back in January 2017, it was $34,910. That’s not to say it’s impossible to find cars under MSRP — you’re just going to have to go for something nobody wants, like a Volkswagen Arteon. (You should want an Arteon though, it’s a very cool car!)
The upshot of all of this is that dealers don’t have to try for your business, which is the worst position for a shopper to ever be in. But relief could be on the horizon. Light duty sales surged in April and May, but the chip shortage has continued to choke supply since then as prices have remained high. As a result, sales tumbled by 17 percent in August compared to July.
At last, we may have reached the tipping point where the buyers who don’t absolutely need a new car have started to say “enough is enough.” But that’s not going to matter much this weekend, so don’t get your hopes up. That said, if you are planning to try your hand at shopping over Labor Day, let us know how it goes in the comments. Best of luck out there.