Shopping for a new car is an appealing prospect vs buying used for many reasons. No previous owner often means no existing problems. New cars offer more bells and whistles in the form of fun technology that older vehicles don’t have. Warranties are better. So, what’s the problem?
The new year hasn’t magically solved the supply chain issues we’ve been dealing with since Covid. Things are improving but supply and demand aren’t working in harmony yet. And America may have invented the semiconductor, but we still rely on East Asia for approximately 75% of global chip production. That means the chips that are needed for new cars, along with other common electronics, are hard to come by.
Additionally, Bernstein analyst Daniel Roeska told CNBC, “there is demand destruction in the industry, given inflation, interest rates, and energy costs − but so far, this has mostly impacted the backlog.”
Combine economic concerns with high prices caused by supply chain issues and many car buyers may be motivated to seek alternatives to new cars. And there are many alternatives.
Besides shopping for a used car at a dealer, online car buying is easy, convenient, and just as affordable as shopping locally. For example, Carvana was rated by Lending Tree as the online car sales company with the best selection of inspected used vehicles.
Depending on where a person lives, public transportation is another option. As are bikes and scooters, ride sharing services, and carpooling.
But for anyone who can’t live without a new car, we suggest you also shop for the best interest rate on a loan, and check with your insurance agent for what the new car will cost to insure before making a purchase.