Covid-19 and the Auto Industry

If you’re shopping for an SUV, you should know that 2020 wasn’t a great year for car manufacturers.

In the first few months of shutdowns, dealerships laid off almost 25 percent of all their employees according to the Bureau of Labor Statistics. Many automakers cited a drop-off in consumer demand; in the second quarter of the year, major manufacturers posted slumps in sales of as much as 39 percent.

Drop-offs in demand lead to a surplus of inventory — in simple terms, car manufacturers built more cars than consumers wanted. This has had an outsized effect on the market for SUVs and crossovers. Dealerships need to move those vehicles off their lots, but the pandemic has prevented many shoppers from visiting their physical locations.

Many Dealerships Are Offering Excellent Incentives Online

Since dealerships can’t depend on foot traffic, they’ve been forced to sell online. That’s something that the industry has resisted for decades. When drivers visit physical lots, salespeople can interact with them directly. That’s not as easy when the buyer is sitting at home in front of their computer.

Dealerships have quickly adapted, launching sales sites with virtual showrooms and advertising competitive incentives through their websites. Buyers can now compare models from different dealerships with a few clicks — and in many cases, they can find financing, place a downpayment, and get their new vehicles delivered the same day.

If you’re considering that tactic, here are a few things to keep in mind:

• Deals vary greatly by location. While automakers are offering nationwide deals to entice customers, some of the best incentives are only available through local dealerships. Be sure to consider all of the potential costs, not just the sticker price — a low APR might offer a better long-term bargain than a hefty cashback program.
• To find the best deals, you may need to look at ads. Local dealerships often advertise aggressively, but they don’t want to offer incentives to buyers that don’t need them. Viewing online ads may yield different incentives than visiting a dealerships' website directly.
• Look at the features, not the vehicle’s year. Some brands occasionally refresh their SUV designs, but for the most part, popular vehicles are largely the same from year to year. By opting for a 2019 or 2020 SUV over the 2021 model, you could save big.

Finally, don’t settle for the first bargain you find. Keep looking for a better one. A new car is a major purchase, and the internet makes research much easier.

Why Some SUVs Are a Great Bargain

SUVs are a particularly good bargain for a simple reason: For the most part, they’re the same. That might not sound like an advantage, but for savvy shoppers, the similarities between popular models create opportunities for bargains.

SUVs are especially popular with consumers, making up 47.4 percent of U.S. auto sales in 2019 according to The New York Times. As a result, the market is extremely competitive. Manufacturers are under enormous pressure to release new models every year with state-of-the-art features that compare favorably to other SUVs and crossovers — and as a result, many of the most popular models are roughly identical. Major brands commonly offer SUVs packed with features like lane assistance, luxury interiors, blind spot monitoring, and emergency brake systems.

That makes comparison shopping easier for drivers. After determining a budget, buyers can look at several different dealerships and find the best overall deal instead of haggling over a single model. By considering all available options (and evaluating them carefully), buyers can often pay well below retail value, even on brand-new vehicles.

To Take Advantage of Surpluses, Research Carefully

The pandemic has had a dramatic effect on auto sales, but trends are already reversing. In November, NPR reported that the auto sector is recovering faster than expected, so shoppers looking to take advantage of the market conditions should start their research.

Look at as many options as possible and consider using online ads to guide your search. View different SUV models from various brands, paying attention to features and sales incentives. With a bit of work, drivers can find brand-new SUVs for pennies on the dollar.