If you are anything like my better half, the thought of haggling over the price of a car at a dealership brings on a case of post-traumatic stress. As the nation struggles to get back to normal amid a slowly declining pandemic, certain ways of living may become a thing of the past – and that could include wrangling with car salesmen over the cost of a vehicle.
Why? A global chip shortage means fewer cars are available for sale on new car lots. This reality has caused layoffs at dealerships because they have little to no inventory to sell. According to The Wall Street Journal, 70,000 new car salesmen “have been permanently let go” since the start of the global pandemic.
Fewer Cars, Less Hassle
Much like the supply chain crisis, the vehicle shortage has been headed this way for some time now. North American automakers cut production of more than a million vehicles back in the spring because there weren’t enough chips available. These electronic devices are used in various ways in cars – from engines to brakes to safety devices. In a nutshell, you can’t make a car without chips these days.
The snowball effect of fewer cars and salesmen has altered car buying. “Short inventories have curtailed haggling,” according to The Journal, and “Salespeople who once spent days prowling dealership lots offering test drives now wrangle online leads and explain the chip shortage to frustrated customers.” Interestingly, fewer employees on car lots may be “the new normal” primarily because dealership owners are finding they can get along just as well at lower staffing levels.
Anyone who has ever run a business knows that fewer employees equal bigger profits – and right now, car dealerships are raking it in per car sale. This has caused an uptick in digital car buying. Online purchasing has become more accessible as new companies enter that market, and the pandemic has those who would typically go to a local car dealer to “kick the tires” more willing to buy over the internet.
TrueCar is one such internet company that sports this new vehicle purchasing model. When you click on their website, TrueCar tells you, “Find the car you want, your way. Then, build your deal to fit your needs.” Shoppers can search by brand, by model, and they can buy new or used. The company pitches consumer power with messages like, “Control your car buying experience … you’re in charge of the process from start to finish.”
A shortage of cars means consumers are paying close to the sticker price anyway, so many feel there is no need to spend the afternoon with a car salesperson when they can sit at home on their computer and buy the vehicle they want.
The U.S. auto industry “accounts for approximately 3% of the total gross domestic product,” according to the keeper of automobile statistics, Fortunly. So, when car sales drop, there is a ripple in the economy. In September of this year, U.S. car sales went down 6.3%. TD Economics reports, “Outside of the pandemic, you would have to go all the way back to August 2011 to see sales record such dismal numbers.” Manufacturers of semiconductors – the people who make the chips – aren’t very optimistic about things changing anytime soon and say the shortage could well “spillover into 2023.”
It’s too early to tell whether American consumers will embrace this new normal of purchasing a vehicle. However, one thing is for sure, the way people buy cars is changing, and the silver lining just may be no more haggling over the price.
~ Read more from Leesa K. Donner.
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