With car showrooms in England open again since the start of June, dealerships have been busily rearranging their operations to welcome customers under new social distancing requirements. But should you be rushing in to buy a new car as soon as you can, or should you wait?
There’s no doubt that the car industry has been desperate to get back up and running as soon as possible, which is entirely understandable. The Society of Motor Manufacturers and Traders (SMMT) estimated that the lockdown has cost the industry £61 million each day for the last couple of months, so the sooner they can sell cars at something approaching normal levels again the better. But that doesn’t mean consumers should be in an equal hurry to run out and buy a new or used car.
The UK is probably facing an extended period of economic uncertainty, and the financial impact of the coronavirus pandemic is likely to last a long time. Once the government stops paying for workers to be furloughed and handing out grants like candy floss, there will almost certainly be a wave of business closures and increased unemployment across nearly every sector of society. It’s not exactly the most confidence-inspiring environment to commit a large chunk of your income towards a new car.
Do you really need to buy a car right now?
Just because the industry really wants you to buy a car right now doesn’t mean that it’s the best decision for you. In uncertain times, it’s more important than ever that you don’t overcommit yourself just to have a shiny new car on the driveway.
The current pandemic has shown us that millions of people have hit financial trouble within weeks of losing their jobs or being put on a reduced income. The lockdown might be easing at the moment, but there’s every chance we could be in a similar position if things turn bad again in a few months’ time.
An HR expert suggested to me recently that Christmas 2020 could see a bloodbath for redundancies, as companies across the UK have lost huge amounts of income this year and will need to slash costs. Plus we’ll be back in winter and the coronavirus could re-emerge all over again, forcing a second lockdown.
Right now, it’s more important than ever to budget carefully and spend your money wisely. If you feel that you can justify buying a car, leave yourself plenty of breathing space to manage a reduced income to allow for unforseen problems. Most people tend to forget that the average car costs about £160 a month to run (not including your finance payments), and some of those running costs can come in large chunks just when you can least afford them.
If that means buying a used car instead of a new car – or a Mini instead of a Maserati – then so be it. Look after your own needs and don’t be swayed by a tempting offer that’s a bit beyond your comfort zone. Stick to your guns and don’t be talked into spending “just a few pounds a month” more than you should, just because a dealer has a nice car ready to go right now.
Building back up to speed
Social distancing rules also mean that a lot of the usual operational processes will be running a bit slower than normal. With limited space available, it’s simply not possible to spread everyone out in the workshops, offices and valeting bays to keep the whole workforce operating at full pace. That means either reducing the number of people at work and/or moving people off-site to alternative premises, either of which will slow things down a bit.
This may mean that a dealership doesn’t have a suitable demonstrator model for you to test drive, or that the car you’re interested in may not actually available for a number of months. Getting your new car ready for delivery may take longer than normal as well.
Clearing a backlog
Dealerships in England were closed for about ten weeks, which means that most of them have a backlog of work that they are working through. In fact, the first thing you may have noticed as dealerships reopened was a lot of bonnets open as staff run around trying to jump-start dozens of cars with flat batteries…
For many dealers, there will be some customers still waiting for cars that were supposed to be delivered back in March. Many of those cars will still be stuck in a holding yard somewhere around the country and will need to be delivered to the dealership.
Sorting through these existing orders is going to take a while and will probably be a high priority. Dealers only get paid once customers get their cars, rather than when you sign your contract. Taking fresh orders is obviously important as well, but businesses need money now and will be looking to get cars out the door so they can get paid. Combined with limits on how many people they can allow on-site at any time, that inevitably means less resources available to deal with new enquiries.
Use this slowdown to your advantage
Regardless of how enthusiastic both you and the dealer may be to exchange your money for a shiny new car, it will all take a bit longer to happen than previously. Use this slower pace to really assess your options and consider any alternatives. Our ten golden rules for buying a car can really help you in choosing the right car and getting a good deal on it, but buyers still tend to get caught up in the excitement of buying a new car and forget some pretty key points.
If you have to wait to speak to a salesperson, wait for a test drive, wait for a finance quote or wait for your car to be delivered, use that time wisely. Ask questions, spend time researching on the internet (we have loads of great car buying advice and information here on our site – take your time to look around) and shop around for deals. Read your paperwork carefully – understand every line of a finance quote and every item listed on your sales order. We get buyers complaining to us every day that they ended up with a car or a finance agreement that wasn’t what they expected, and usually it’s because they didn’t read their contracts properly before signing them.
Cars cost money to run, so look for offers that can help with this. What about a free annual service or free breakdown cover? If you think that you’d like GAP insurance, you will almost certainly find it’s cheaper online from an insurance company than from the dealership.
Understand your real financial position, not just the amount of money you have in the bank on the day you visit a dealership. Look at your worst-case scenario for the next year or two – what if you lose your job or fall ill?
Call to make an appointment
It’s always a good practice to call and make an appointment with a dealer if you’re serious about buying a car, but in the next few weeks it’s likely to be even more important.
If you make an appointment, you are signalling that you are a serious customer rather than someone who just happened to pop in on their way somewhere else, so a salesperson should be ready and waiting to help you. With limits to the number of people allowed in a showroom at any one time, it also means you won’t be waiting in socially-distanced queue or turned away if you have an appointment.
Be patient – the deals may get better in a few months
There seems to be a general assumption that it’s a buyer’s market as showrooms re-open, and that dealers will all offer amazing discounts to get your business. The situation will vary from dealer to dealer, but it’s entirely possible that the deals on offer won’t be as generous as you may have been expecting – at least, not yet.
Car factories have been shut down for the last few months, so the usual supply of new metal arriving in dealerships every week hasn’t been happening. Yes, some brands will have plenty of cars currently parked up in fields somewhere, but others won’t and certainly they won’t on every model in the range. Given that car dealers won’t be operating at anywhere near 100% capacity for the next several weeks, and car factories won’t either, it may well be that stock on certain vehicles could be limited for a number of months. Therefore, there is no pressing need to offer enormous discounts on cars they don’t have.
As always, there are deals available, but they are likely to be on certain vehicles only – usually cars that aren’t especially popular or are available for immediate delivery. If the car you want falls into either of those categories, you may be able to push for a better deal than you’d normally expect. If you want a car that has a six-month waiting list, not so much.
It may be that deals get better over the summer and in the run-up to the next number plate change in September. In theory, production will be getting back to normal by then and dealers will have more stock to choose from. Their pre-lockdown backlogs will have been cleared and they’ll be on the hunt for new customers. So it may be better not to buy a car right now and just hold off for a few weeks to see how the land lies.
Make the best decision for you, not the dealer
If you’re looking for a great deal, there’s no need to go charging into buy a car just because dealers have re-opened. The maths of supply and demand haven’t changed, and that’s what determines car prices. If there’s a huge pent-up demand for cars and dealers can’t get supply fast enough, there won’t be any great deals. On the other hand, if demand is low and dealers are desperate to sell cars, you’re not going to miss out on a great deal by waiting for a few weeks.
If the car you are interested in is not available to test drive, or you’re going to have to wait six months for delivery, look at alternatives that meet your needs – which may not be the car that the salesperson is trying to sell you because it’s all they have available.
Ultimately, the most important thing is to assess your options carefully and keep your Captain Sensible hat on when making any big financial decision. Take your time and don’t be rushed by a dealer or anyone else. It’s always been one of our key messages and it’s more important than ever if you want to buy a car right now.
This article was originally published in late May 2020 before showrooms re-opened, and updated in mid-June 2020 to reflect the trading situation now that car sales have resumed in England.