The coronavirus pandemic may have at least one upside for consumers: great deals on a new set of wheels.
Hertz, for example, is selling some 2019 Chevrolet Corvette Z06 models — which originally had a starting price of around $81,000 — for under $60,000. The car rental company normally sells its inventory but has put more and newer cars on the market after announcing it was filing for Chapter 11 bankruptcy.
If sports cars aren't your preferred method of transportation, dealers are marking down models of all types. And there may be good reason to shop now.
Emily Parkhurst, a journalist from Seattle, shares a car with her husband, Rob Smith. And while Parkhurst generally relies on public transportation to get to and from work, the pandemic has caused the couple to rethink things. "We were concerned that when [the city] starts to open back up, it wouldn't be safe for her to take public transportation or ride-share," Smith says.
That led the couple to try their hand at car-shopping during the pandemic — a move that paid off, Smith says, as they were able to secure a great deal on a new vehicle and save $1,500.
Video by Stephen Parkhurst
Many car dealers are faced with a dilemma: They need to sell cars, but the pandemic has meant many customers can't or won't come into showrooms. To drum up sales, many are offering tough-to-turn-down deals like 0% financing, longer loans, and discounts off the sticker price, especially on 2019 models, according to a recent report from iSeeCars.com, an automotive search engine.
In the final week of March, dealers started increasing incentive spending to attract more customers. By the middle of May, average incentives on new vehicles reached more than $5,000, an increase of about $1,000 since state stay-at-home orders began, according to data from J.D. Power.
Still, depending on where you're shopping, buying a car now can be a tricky process.
Because many people are and have been effectively immobilized by the coronavirus pandemic, or have even lost their jobs and sources of income, lots of potential car buyers have hit the brakes. For some automakers, sales were down more than 50% in April.
"Sales in April hit a real low," says Jessica Caldwell, executive director of insights at Edmunds. Sales started to dip in the middle of March, she says, mostly because consumers started tightening their belts, but also because dealerships needed to shut down and change up their sales processes to account for social distancing and other guidelines.
"It's been hard for people to wrap their head around a major purchase," Caldwell says. And given that the average cost of a new vehicle was at or near all-time highs ahead of the pandemic, many consumers have decided to wait.
As for changing sales processes, it's something of a "Wild West" feel for dealers right now. Some have completely shut down, while others are open but operating within state and local guidelines. "It's layer upon layer of complexity" for dealerships, says Caldwell, making it hard for their reps to close sales.
Video by Jason Armesto
As a result, many dealers have transitioned to a digital process, where communication with customers occurs over the phone or online, and in some cases, cars are delivered for a test drive. Though it's a change for traditional dealerships, some car sellers have operated in a similar way for years, including Tesla and used car marketplace Carvana.
Amy O'Hara, associate director of communications at Carvana, said she expects the pandemic is likely to continue to digitize car buying. "We've seen more consumers show a preference for purchasing everything online," O'Hara says, "so we do see the potential for this changing consumer preference to accelerate online car buying."
Right now, "it's a buyer's market," says Caldwell. So it's important to negotiate for more favorable terms. Ask for discounts off the sticker price, lower interest rates, free accessories, and higher trade-in value on your current vehicle.
Services like Kelley Blue Book and Edmunds will help you figure out a fair price for the new or used vehicle you're considering, based on current dealership incentives. TrueCar will tell you what other people have recently paid for that same make and model.
Be particularly mindful of financing offers. Low- and no-interest loans are a very popular tool for dealers right now. Caldwell says that "26% of vehicles financed in the U.S. during April had no-interest loans," even including luxury brands. Still, it's helpful to compare financing offers and run the numbers to make sure you don't trade a lower monthly payment for a longer-term loan that costs you more overall.
The opportunity for car-shoppers to take advantage of pandemic pricing is fleeting, experts say. So if you're in a financial position to pursue a car purchase and had planned to buy one before the crisis, it may be wise to buy now, before the economy starts to recover and car sales pick back up, says Caldwell: "As things start to improve, these really good deals may start to drop off."
More from Grow: