This week, Craig Siminski, of CMS Retirement Income Planning, shares an article discussing recent trends affecting the automotive market and includes suggestions for those who want to purchase a vehicle:
The average price for a new vehicle reached $47,077 in December 2021, which amounts to a 14% price hike in just one year. Perhaps more startling, the average price paid for a nonluxury vehicle was $900 above the Manufacturer’s Suggested Retail Price (MSRP), otherwise known as the sticker price.
What’s causing this madness in the new car market?
It’s no secret by now that an ongoing global shortage of microchips has caused an industry-wide slowdown in the production of new vehicles.
The chip shortage is generally expected to last well into 2022, if not longer, while demand for new cars is expected to remain strong. Moreover, the year began with an estimated 4.5 to 5 million consumers waiting in the wings to buy cars.
With demand far outpacing supply, many dealerships don’t need to offer the usual discounts and incentives. Another reason for higher transaction prices is that many of the vehicles available for sale are trimmed out with upgrades that boost dealers’ profit margins.
Some dealers have added exorbitant markups for high-demand vehicles, called market adjustments, that can result in…
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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 25 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.
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