Should I buy a new car?
Big decision clouded by coronavirus disruption.
The current COVID-19 pandemic has been described as potentially the biggest crisis since World War II.
Like many other industries, the auto industry is in turmoil with temporary shutdowns of vehicle and component manufacture around the world.
In Australia, the automotive industry had been finding conditions tough with new vehicle sales declining for nearly two years now.
Last year, sales were down around 8% on the previous year and they have slumped further in the first part of 2020, and likely to drop to levels not seen in more than 10 years.
So, is it a good time to buy a new car? Are new car dealers even open for business?
Let’s deal with the easier, second question first. The Federal Chamber of Automotive Industries (FCAI) has advised that automotive brands and their dealer networks remain open to provide sales and service support to customers, highlighting the need for safe and reliable private transport given the focus on social distancing.
Like other businesses, the safety and health of their staff and customers have become a high priority, whilst trying to maintain business as usual.
FCAI chief Tony Weber said on 24 March “ the industry has considered and adopted a number of additional hygiene and safety protocols, including extended cleaning processes, personal distancing, and contactless sales and service consultations – all with the number one priority of ensuring the safety and security of our communities.”
But there’s no doubt that car dealers are struggling with fewer consumers visiting showrooms and sales slowing.
Implementation of tighter lockdown restrictions on social interactions to halt the spread of the virus will no doubt bite harder too.
So, in the current industry climate, if you really are still keen on a new car then you should be well placed to drive a good deal.
And you would expect dealership staff to roll out the red carpet and welcome you with open arms, figuratively only, given social distancing measures. And, of course, we have record low interest rates.
The FCAI says despite many vehicle and component plants around the globe temporarily pulling the shutters down, “at this stage there are no major restrictions on stock of either vehicle or parts”.
Personal financial circumstances have, sadly, changed for many though.
And what the future, including economic fallout for Australia and individuals, will be as a result of this pandemic remains to be seen.
So, whether it’s the “right time” in a financial sense to buy a new car, that’s anyone’s guess really, and will depend on too many variables in an ever-changing landscape to answer.
And the situation keeps evolving with tighter restrictions in place to help thwart the spread of the virus in the community.
Latest restrictions preclude leaving home for anything other than a limited number of specified purposes including essentials such as buying food, medication and the like.
So, heading out to buy a new car, unless it could be reasonably argued there is an essential element to it, is hardly compliant with the restrictions or socially responsible.
Is a “bargain” really worth the risks to self or others, and the potential for worsening this health emergency? We would say, probably not.
Government restrictions in New Zealand have seen dealers effectively closed to all but service, sales, and parts necessary to assist essential services and workers. Vehicle sales are, by exception, for essential services/workers only. And maybe at some point we may see that here.
If you really are still intent on the possibility of a new car purchase then consider exploring other options for negotiating a deal without going out in the community – online options (may be less flexible in terms of price negotiations), or the dealer may offer a one-on-one to-you service. (We are talking new cars here, but to be clear, we wouldn’t recommend purchase of a used car online without at least sighting the car first.)
And if you are about to sign on the dotted line for those new wheels, ask the dealer to check stock of the vehicle you are after first and make sure you have a delivery date agreed to.
Consider though, that once restrictions lift and there’s a bright light at the end of this COVID-19 tunnel, the industry will still be there, they will be as keen as ever to gets sales up and running, and deals should still be possible.
And while there will be pent-up demand to be met, some of those who might have bought before the pandemic struck will no longer be considering a new car. And who knows what industry stimulus packages might emerge between now and then to help encourage consumers back into the car market.
The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.