The car market is ‘absurd.’ Here’s what to do if you have to buy one anyway
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A customer shops for vehicles at a car dealership in Richmond, California, on July 1.
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If you want proof that the COVID-19 pandemic didn’t affect everyone equally, look no further than car-buying trends. While overall car sales in 2020 were down 14.6% year-over-year, dealer profits ballooned by 48%, according to 2020 survey results from the National Automobile Dealers Association. Tighter inventories, reduced workforces, and less—if any—need for dealer incentives all contributed to the spike in dealer profits.
Profits were also aided by the kinds of cars being sold off the lot. Sales of vehicles priced between $80,000 and $90,000 in 2020 grew 91% year-over-year, according to data from J.D. Power, while sales of vehicles priced below $20,000 dropped 30% year-over-year. This is largely because wealthier Americans, whose jobs were more likely to weather the economic storm, didn’t see income levels drop, while poorer Americans, whose service industry jobs were cut early on, lost some or all of their wages.
An increase in luxury car sales isn’t the only car-buying trend we’ve seen spring up over the last year. CoPilot analyzed its data of more than 30 million car sales via the car-buying app between January and December 2020 to highlight 10 key car-buying trends during COVID-19. The analysis looks at different car makes, models, production years, months of purchase, fuel types, and car body types to determine which cars people were most interested in over the past year. Datapoints in the forthcoming list show trends drawn from CoPilot data but do not cover all national vehicle sales.
Keep reading to explore highlights of our findings, from the state with the most vehicle sales to which motor vehicle company sold the most cars in 2020.
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- Cars bought in 2020: 2,937,889 (10.1% of the state's population)
- Population of Texas in 2020: 29,145,505
The pandemic caused thousands of Americans to relocate, fleeing overcrowded cities where community spread was more prevalent or capitalizing on new job flexibility and moving to areas with easier access to nature and lower costs of living. Texas was among the states with the highest number of transplants, welcoming thousands of folks from as far away as California and New York. With no public transport system to speak of, these new residents—many of whom came from public transit hubs like San Francisco—needed to buy cars, which likely contributed to the Lone Star State leading in auto sales last year.
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- 1989 cars bought in Chicago: 277
- 1999 cars bought in Chicago: 3,918
- 2009 cars bought in Chicago: 46,055
The jump in used car sales in 2020 correlated to commuters growing leery of using buses, trains, and ride-hailing services during the pandemic. Chicago, home to the second-largest public transportation system in the country behind New York City, saw the biggest jump in used car sales for model years 1989 to 2000. Why used over new? For some, swapping out a metro card for a vehicle represented the second or third family car; others sought to save some cash during a tumultuous economic year with significant job insecurity. In July 2020, the average value of a used car spiked by more than 16%, according to data from Edmunds.
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- 2017 cars sold: 64,187,574
- 2020 cars sold: 173,916,451
- 2021 cars sold: 81,473,898
Stay-at-home orders forced many automakers to shut their doors temporarily, bringing production to a halt while driving up prices. The supply shortage and outsized price hikes drove demand for used cars, which are generally more affordable and abundant, resulting in older models being among the top-sellers of 2020.
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- Ford: 3,859,157 cars sold
- Chevrolet: 3,636,660 cars sold
- Toyota: 3,250,499 cars sold
- Honda: 2,280,636 cars sold
- Nissan: 1,878,230 cars sold
- Jeep: 1,663,198 cars sold
- Hyundai: 1,237,576 cars sold
- GMC: 1,139,611 cars sold
- Kia: 1,068,344 cars sold
- Subaru: 1,059,733 cars sold
- Ram: 1,015,563 cars sold
Overall car sales were down for much of 2020 compared with previous years. However, as economies and cities began re-opening in the latter part of the year, many people elected to buy cars and travel that way instead of using public transport or commercial planes and trains. This trend contributed to the sale of more than 1 million cars from each of these brands.
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- Ford cars sold: 3,859,157
- Bestselling months for Ford: December (444,696 cars sold), June (342,603 cars sold)
- #2 bestselling car make: Chevrolet (3,636,660 cars sold)
- #3 bestselling car make: Toyota (3,250,499 cars sold)
Despite Ford's U.S. auto sales slipping 15.6% in 2020 compared to 2019 amid the pandemic, the auto giant managed to come out on top in terms of vehicle sales last year. Ford has transitioned away from passenger cars in the last several years, focusing instead on the production of its increasingly popular SUVs and bestselling trucks that offer higher profit margins for the company.
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- Ford F-150 cars sold in 2020: 1,007,664
- Bestselling months for F-150: December (102,788 cars sold), May (96,430 cars sold)
- #2 bestselling car model: Chevrolet Silverado 1500 (841,331 cars sold)
- #3 bestselling car model: Toyota RAV4 (617,065 cars sold)
The Ford F-Series in 2020, which includes the F-150, enjoyed its 39th year in a row as the bestselling vehicle in the U.S. The series held onto its title despite tighter inventories and a new redesign that incorporated lighter aluminum in production. The F-Series is lauded for its towing strength, engine power, gas mileage, and luxury design.
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- #1 car type sold in 2020: SUVs (13,757,221)
- #2 car type sold in 2020: four-door cars (8,199,331)
- #3 car type sold in 2020: crew cab pickup - short bed (2,846,424)
SUVs outsold sedans nearly 2-to-1 in 2019, a trend that continued throughout 2020 and into 2021. Of the 20 bestselling vehicles in 2020, 11 were crossovers or SUVs. The growing popularity of SUVs underscores the demand for comfort, passenger space, and safety features.
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- Gasoline cars sold in 2020: 25,632,625
- Hybrid cars sold in 2020: 1,293,767
Gas-powered cars still reign supreme even as more climate-friendly options become available. But consumer interest in EVs and hybrids has grown as fuel costs rise, production costs of electric vehicles (EVs) drop, and people can travel further on a charge. Many popular hybrid models, from Teslas to Toyota Priuses, enjoyed rising popularity in 2020. That's expected to continue: Bloomberg New Energy Finance predicts EVs may be cheaper than gas-powered vehicles as soon as 2025.
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- Cars sold in December 2020: 3,424,804 (only month over 3 million cars)
Year after year, December has proven to be the best month to buy a car. The month marks both the end of the quarter and year, meaning salesmen and automakers are especially motivated to make sales. As a result, buyers can often negotiate great deals, something that didn’t change even in the midst of a global pandemic.
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- Cars sold in April 2020: 1,402,300 (only month under 2 million cars)
As mandatory stay-at-home orders began in the U.S. in late March 2020, a general sense of uncertainty took hold. Business closures sent unemployment rates skyrocketing and many Americans grew wary of making significant purchases. April 2020 auto sales were roughly half that of the same month in 2019 for automakers Toyota and Honda.
This story was produced and distributed in partnership with Stacker Studio.
Pat Shozo has been trying to buy a used car for his son who’s going to attend college in the fall. But after looking for more than three months, Shozo, who lives near Los Angeles, said he’s ready to give up.
“Everything’s so inflated,” he said. “It’s actually absurd.”
Prices for used cars have rocketed to record highs this year as supplies of new cars have been hampered by computer chip shortages.
If you’re looking for a new car now, whether it’s brand new or just a new-to-you used car, experts say it’s more important than ever to be open-minded about the exact make and model you need.
“Don’t fall in love online,” said Ivan Drury, a data analyst with Edmunds.com.
With a budget of about $15,000, Shozo said he’s been looking at 5- to 10-year old Hondas and Toyotas. Even when he has found something to consider, he said, dealers insist he pay for expensive pre-installed add-ons, like paint protection or an alarm system that make the price even higher.
“Bizarre things they have the gall to charge $4,000 or $5,000 for,” he said. “It really makes it no fun at all to buy a car.”
At least Shozo is being flexible about what he’s looking for, which is one thing experts advise.
“Right now, when there’s limited inventory, it makes it hard to just go out and find it and buy it,” said Joe Wiesenfelder, executive editor at Cars.com. “That leaves those looking for something very specific in the tightest bind.”
Here’s what you need to know about shopping for a car in today’s crazy market:
Consider leasing instead of buying
Shozo thinks he might just lease a car for himself and his wife and let his son drive one of their current cars.
That’s probably a good idea, said Drury. Luxury automakers, especially, are still offering leasing incentives, he said, making it possible to get a BMW or Mercedes for only a little more than you might pay to lease a mainstream model. And leasing could allow him to ride out the currently inflated car market.
If you’re leasing now, negotiate a strong exit
If you have a lease contract coming to an end soon, you could be in a really good position, said Wiesenfelder. A lease usually includes a pre-set price at which the lease customer can buy the car at the end of the lease term. That price is probably considerably lower than the car could actually be sold for now.
You could just buy the car at a bargain price and keep it or quickly resell it at a profit. Or you could just negotiate for your dealer to buy the car from you, said Wiesenfelder.
“Not everyone is built for this sort of transaction, playing those negotiations, but it’s doable,” he said.
Also, it will require some patience to wait for all the paperwork to go through, he said. But it can pay off for those with the perseverance.
Cash in on your current car
There is some good news for car shoppers in this current crazy market. If you have a car to sell or trade in, it’s worth way more than it would have been before.
Sean Kalist, who lives in the southeastern part of Illinois, said he recently bought a Toyota Rav4 Hybrid — not the plug-in version — after selling his 2014 Volkswagen Passat. He had bought the Passat as a used car 18 months ago, he said, and sold it for exactly what he had paid for it back then.
“So we drove it for free for a year and six months,” he said.
He also traded in a 2019 Toyota Sienna minivan, he said, which was also worth nearly the amount he’d paid for it two years ago.
So while he did have to pay nearly full sticker price for the Rav4, he said, that was offset by the benefit of having paid nearly nothing for two other vehicles. He couldn’t find one in stock at any local dealers but was able to order one through a local dealer with the features he wanted, he said.
Kalist’s claims about the money he sold his two used cars for are believable given the current market conditions for used minivans and diesel cars, said Drury in an email.
Pricing for minivans is particularly strong, he said, since there just aren’t many models to choose from. And pricing for VW’s diesel cars has bounced back, too.
“I’ve seen pricing on those much stronger than when people had thought ‘dieselgate’ would destroy the resale [value],” Drury said.
If you can afford to, wait it out
Anne Christopher, who lives in Atlanta, has been shopping for a Toyota Rav4 Prime, a plug-in hybrid version of the popular crossover SUV, since last fall.
Even before the chip shortage seriously hampered production, she was struggling to find one to buy. Toyota has mostly been shipping Rav4 Primes to states like California and New York, where demand for plug-in vehicles is greater. Christopher was even willing to travel to the Northeast to get one, but still couldn’t find one at a reasonable price, she said.
So she decided to forget about getting a new car for now, and has put a deposit on a Fisker Ocean, an electric SUV from a California-based startup that isn’t due to be in production until the fall of 2022.
In general, waiting is a really good option for those who don’t really need a car now, said Wiesenfelder. You might be tired of paying for repairs and maintenance on your current car, but it could well be less than you’ll pay for a new car — especially now.
“if you’re going to buy a brand new car and pay hundreds of dollars a month, every month, for the next two, three or four years. That’s definitely more expensive than a $1,000 a year in repairs or $2,000 a year,” he said.