How to buy a car when there are few. Tips on markups, trade-ins

John Patterson has sold thousands of cars successful his near-30-year vocation successful the car industry.

When the proprietor of 4 dealerships was asked if he’s ever seen an inventory arsenic bladed arsenic 2021, his reply is simply a succinct “never.”

Patterson says the deficiency of caller car proviso has led to immoderate dubious income tactics specified arsenic dealers marking up caller vehicles $2,000 to $10,000 implicit the manufacturer’s suggested retail terms oregon MSRP. He says this is simply a maneuver helium refuses to practice.

“It’s not however we spell to concern astatine immoderate 1 of our 4 stores, but it’s happening each day,” helium said successful a telephone interrogation Wednesday.

The Patterson OC Auto Group sells Mazdas and Hyundais astatine the Tustin Auto Center and Acuras successful Mission Viejo. He besides has a Hyundai dealership successful Huntington Beach.

Despite the proviso disruption, Patterson says determination are opportunities retired determination for immoderate car buyers who person bully trade-ins arsenic newer utilized cars tin spot $2,000 to $5,000 much successful worth than a twelvemonth ago.

For now, helium doesn’t spot a let-up successful the inventory situation.

“We conscionable don’t know, right? It’s much than conscionable a microchip issue. It’s a proviso enactment issue,” helium says. “We ever speech astir those boats that are backed up, and I don’t cognize that our manufacturers cognize capable to springiness america the intel that we need. They springiness america what they have, and oftentimes it changes, time to day, week to week and surely period to month.

We asked Patterson to stock immoderate of his penetration into the 2021 market. His answers person been edited for length.

Q: What are you seeing connected the dealership tons these days?

A: So, the world is the cars are conscionable not arsenic disposable arsenic request outweighs supply. And arsenic a result, there’s an absorbing dynamic successful the marketplace.

There are surely plentifulness of scenarios wherever you’re proceeding astir a trader adding a markup of $2,000 each the mode to $10,000 for a caller car. I heard astir a $20,000 markup connected a car not excessively agelong ago. Each trader has the prerogative to spell astir concern the mode they privation to. They’re faced with not knowing however overmuch inventory they’re gonna have, not conscionable now, but for the indefinite future.

Q: So, nary solution until 2022. That’s a agelong clip to combat implicit cars.

A: I privation to marque definite that we’re positioning this appropriately. The customers aren’t getting a earthy woody here. In immoderate ways, they’re getting a large deal. And here’s what I mean. If a lawsuit has immoderate benignant of a trade-in astatine all, if they’re presently successful a leased conveyance oregon if they’re presently coming retired of a car and going into a car, they’re successful a bully spot.

They’re getting affirmative equity from their existing vehicle, the aforesaid conveyance that they would beryllium trading successful a twelvemonth ago. Let’s accidental it’s a 5-year-old car and let’s accidental a twelvemonth agone that 4-year-old car would person been worthy $20,000. That aforesaid present 5-year-old car that was worthy $20,000 close present is worthy $24,000.

So, successful a script similar this, if that idiosyncratic comes into 1 of my dealerships, and they’re not paying implicit model sticker, they travel retired a small spot up in, if they are getting the close conveyance and the close price. And let’s accidental they were buying the car for a mates of dollars implicit invoice. Their concern is amended present than it would person been a twelvemonth ago.

Q: Are you having to pivot astatine each successful presumption of staffing?

A: We’re trying to support attitudes high. From a work and parts perspective, it appears to beryllium somewhat concern arsenic usual. The cars that we’re selling are coming successful if we’re doing a bully occupation of retaining our guests. In fact, 1 could reason that work is gradually expanding due to the fact that successful 2020 a batch of the folks weren’t driving astatine all, and present they’re driving much and going backmost to their office.

So they request to support their car astatine a higher level contiguous than it was a twelvemonth ago.

As it relates to sales, we’ve truly had to beryllium much businesslike with each 1 of our teammates. We person to merchantability pre-owned vehicles astatine the highest level we perchance tin and get them to the champion of our ability, making definite that we’re pre-selling cars truthful that virtually the infinitesimal they arrive, the work section inspects the car and they’re sold that time oregon the adjacent day.

Q: Your dealerships are selling utilized cars, too. How is that going?

A: We’d similar to merchantability arsenic galore trade-ins arsenic we perchance can. Obviously, if the conveyance that we’re taking connected commercialized has superior mechanical issues oregon superior assemblage issues, we nonstop it retired to the auction and it finds different home. But if the conveyance has 50, 60, 70,000 miles, if it’s a conveyance that would beryllium a large conveyance for idiosyncratic to bargain secondhand, we’re much than blessed to merchantability it. So agelong arsenic we cognize that it’s mechanically dependable and it’s going to beryllium harmless for the adjacent driver.

Q: SUVs proceed to beryllium the astir fashionable option. Is that existent for Mazda, Acura and Hyundai?

A: At slightest 70% of our vehicles that are being sold are SUVs, truthful yes, they’re precise hot. That’s the biggest conception that exists.

Q: How often are you seeing the inventory refresh?

A: We are pre-selling cars that are incoming each day. So, we person visibility of cars that are going to beryllium coming successful implicit the adjacent week to 4 weeks. Once upon a time, we mightiness beryllium pre-selling 5 to 10% of our inventory. Presale conveyance purchases astatine our stores are present 80% of the time.

So Mr. Smith oregon Mrs. Smith privation a definite car, nary problem. That car isn’t gonna beryllium present 3 weeks. We’ll enactment your sanction connected that car and erstwhile it arrives we’ll fto you know, and travel connected successful and acquisition it.

Tips from Patterson connected buying a car

Do your probe up of time. Give yourself a period oregon two, astatine least, to get the car. “Identify a car connected Nov. 1 that you privation earlier Jan. 1,” helium says.

Give the trader an accidental to bargain your existing conveyance whether it’s lease oregon purchase. Do your homework and marque definite the connection is fair.

If you wage implicit the model sticker price, that is not going to beryllium taken into information 3 years from now, erstwhile you privation to get retired of that car. The valuation connected that car isn’t going to instrumentality into information that you paid $5,000 implicit MSRP due to the fact that you privation to get the close car.