Car buyers feeling the squeeze as prices at dealerships swell thousands over MSRP
NEW YORK -- The hottest commodity in town right now is on four wheels. Car dealers are raising prices, car makers are pushing back and customers are stuck in the middle.
CBS2's Jessica Moore met two exhausted car buyers and has tips on how you can avoid the squeeze.
"It's insane... my first car was $1,500," said Rosie Geiger, who just helped her nephew buy his first car.
"Do you feel like your options were more limited than you imagined they would be?" Moore asked.
"Absolutely," Geiger said. "We were willing to spend a little more than 10 (thousand), which is a lot of money for a first car, and still it was very limited."
"I'm pretty shocked by how much they're going for. I wonder how long that can last and if I could hold out," Steve DePaul said.
Tom Paolella, owner of Car Concierge Plus, helps people like DePaul and Geiger navigate the crazy car market.
"What's the current state of affairs in the car buying world?" asked Moore.
"It's really bad. Not to be Debbie Downer, but it's bad for a lot of people," Paolella said.
With supply chain issues and shortages of crucial parts like semiconductor chips, automakers are unable to meet the demand for new cars, which are now going for well over the MSRP or sticker price.
"There are cars like a Kia Telluride, the average is $10,000 over. So we're not talking rare exotics here. A Toyota Camry is $4,000 over, cars that people relate to. Then you have the complete opposite, a Mercedes G wagon is anywhere from $15,000 to $100,000 over," said Paolella.
Dealers along 11th Avenue in Manhattan said they only have about 25% of their typical inventory in stock, and almost all are listed above sticker price.
Car manufacturers said the shortage and higher prices will likely last through the end of the year.
Emily Voss, director of public relations at Carfax, said used car and truck prices are 40% higher than they were this time last year, with the average used vehicle now costing $29,000.
To add insult to injury, experts said the currently-inflated auto prices mean most people will find themselves underwater in a few years.
"You're going to have a car that has continually depreciating and if you haven't paid more than your monthly payment on you loan, you'll go to turn in a car and be upside down on your loan six, seven, eight thousand dollars in equity," said Paolella.
Some tips for those in the market:
- Try to order a new car direct from the manufacturer.
- Consider buying your car at the end of your lease - a good deal since the selling price was calculated years before the market took a turn.
- Consider an electric vehicle - more competition in that corner of the market is beginning to drive down prices.
- If you opt for a used car, make sure you know what you're buying.
"Get a trained mechanic to look at the vehicle... You might feel the pressure to move quickly, but you still need to do your homework," Voss said.
Experts also suggest buyers look for cars outside their region and remain open about color, make and model.
When it comes to buying a car right now, you can't avoid the squeeze entirely. But if you keep an open mind, you can lessen its grip.
Several major car manufacturers, such a General Motors and Ford, told CBS2 they do not support dealers selling vehicles above sticker price and have threatened to withhold inventory of their most popular vehicles to those who do.
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