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    How to Buy a New Car in Today’s Challenging Market

    Availability has improved over the past year, but production favors higher-priced models

    A woman in a car dealership taking a photo of a New car Photo: Getty Images

    New-car dealers are finally showing more vehicles on their lots as inventory creeps back upward. And because of a variety of factors—inflation, higher interest rates, a year’s worth of new-car scarcity—demand for cars has cooled off a bit. Even so, availability and deals are still scarce for certain models. In other words, it’s a time when those who have to buy a new car should approach the process carefully. It’s still possible to have to pay thousands over the manufacturer’s suggested retail price to get the car you want. But a little research and some flexibility can go a long way.

    Consumer Reports is no stranger to the wild ride this market has given consumers over the past few years. Relying on our staff of secret buyers, we typically buy 40 to 50 new cars every year to test the most popular models and trims. But until recently, we have struggled to keep pace, and have faced long waiting periods for some of the models we needed to test. Since the beginning of 2023, we’ve sealed the deal on dozens of new cars, including the Jeep Grand Cherokee 4xe and the Toyota Prius. Unlike last year, however, when we were often paying thousands above MSRP, most of this year’s acquisitions have been closer to list price.

    “It’s still not a great time to buy a new car, but if you need something now, there are options,” says Gabe Shenhar, associate director of CR’s auto testing program.

    More on Car Buying

    According to a nationally representative survey CR conducted in 2022, compared with 2019, before the pandemic, more people have been buying new cars than used. And those who have bought cars have been shelling out for more expensive ones. Throughout the past two years the car-buying market has posed a challenge for many consumers, forcing them to be flexible.

    The new-car shortage that has plagued buyers until fairly recently came about mostly because of the global pandemic-related scarcity of the microchips needed to build them. That problem has persisted, although things are improving slightly. As a result, affordable new and used cars are harder to find, so used cars are still more expensive than they were pre-pandemic. According to the Bureau of Labor Statistics, although used-car prices have come down more than 5.6 percent since last year, they’re still more than 40 percent more expensive than they were in February 2020, just before the pandemic caused widespread economic turmoil.

    Pat Ryan, founder and CEO of CoPilot, an app that uses pricing and other data to help consumers make informed car-buying decisions, says that new-car shortages haven’t been uniform, and that some of the best deals right now can be had among used EVs, which have fallen in price by 36 percent since last year.

    And as new-car inventory improves, manufacturers are beginning to trot out more incentives to entice buyers. At this point, most are offering deals on leasing and financing, rather than cash incentives, says Alain Nana-Sinkam, principal of Triple Double Automotive, a firm that tracks the industry. However, a manufacturer-subsidized interest rate on a new car could—for a qualified buyer with good credit—make that a more affordable option than an expensive used car financed by a higher-interest loan.

    CR has advice to help you navigate a market that’s tough for buyers.

    Weathering the Storm

    As CR’s expert buyers have found, the car you want is out there somewhere. It often comes down to having patience and being ready to buy as soon as you find something you like. According to a recent report from Cox Automotive, manufacturers have been prioritizing more expensive luxury cars. Increasing sales of them have pushed the average price of a new car ever higher. But that doesn’t mean there aren’t more affordable models available.

    “It’s a good idea to focus on the model you want, and to know what all of your must-have options are and how much they cost,” Shenhar says. “Do your homework. Learn the difference between the dealer cost and the MSRP, and locate two or three vehicles by searching on the manufacturer’s website or on websites like TrueCar, a CR partner, or, for example.”

    In this market, be ready to accept that prices may not be as negotiable as they were a few years ago. If you find the car you want at a reasonable price, and with favorable financing or lease terms, you’ve already won half the battle.

    Our main advice for buyers in this tricky market is to act quickly and negotiate from an informed perspective. That can make the difference between getting a fair deal and getting no deal.

    Prearrange financing. Figure out your budget and get financing based on what you can afford to pay monthly and as a down payment. It’s always a good idea to get financing set up through your bank or credit union before going to a dealership to look at cars. That gives you a baseline against which you can compare the terms of dealer financing, which may or may not be a good deal. Sometimes dealer financing benefits from manufacturer subsidies that allow the dealer to offer a lower interest rate than you can get from your bank. Having financing ready to go will also give you a leg up if you’re looking at a sought-after car that isn’t likely to remain on the dealership lot for long.

    Don’t borrow too much. If you paid 16 percent over MSRP for a Kia Telluride, for example, consider what it will be worth when you trade it in. For example, if you buy an SUV that depreciates $15,000 off the sticker price in three years, but you paid $8,000 over MSRP this year for it, that means it cost you $23,000 to own it for that short period. Cars are depreciating assets; overpaying for a new car is likely to compound your long-term losses. (See the worst car deals right now.)

    The same goes for a used car that costs almost as much at 2 years old as it did when it was new. You don’t want to get a loan on a car that’s going to lose a lot of value over the next couple of years, or you may end up underwater on the loan, where you owe more than the car is worth for an extended period.

    See what’s available. If you’re shopping for a new car, dealers near you may not have exactly what you’re looking for. Instead of going to the dealership to see what it has, look on its website or call first. You may need to search at several dealers to find something that’s close to what you’re looking for.

    Consider an EV. When gasoline prices spiked in 2022, demand for EVs spiked. Now that prices are lower again, and there are more models coming to market, EV availability has become more robust, which means that it could be easier to score a deal on one.

    More on new car deals

    Expand your geographic search. If dealers where you live don’t have the car you want, try sellers outside your area. Be cautious about casting your net too wide, though. You want to be able to go see the car and test-drive it before signing a sales or leasing contract—especially for used cars. And with the market as hot as it is right now, the car you’re looking at might not be there if you have to travel too far to get to it.

    Do your research. Whether buying new or used, consult Consumer Reports’ road tests and ratings, looking at reliability, owner satisfaction, and safety.

    You want a short list of contenders to test-drive, and even more than before, you want a good understanding of the various trim versions and features because you might not find your dream configuration at the dealership. Print out material from and the manufacturer’s website so that you have it with you for reference and note taking.

    Buy something reliable. If you’re forced to pay more than usual for a new car, your best bet is probably going to be to keep it for the long haul. Consult CR’s reviews and ratings to make sure you buy something reliable that won’t give you problems later on. (See our guide to car reliability.)

    Compromise to a degree. Even if the dealer has the model you want, the car might not have some of the features you were looking for. Decide which options are really important and whether a vehicle not having all of them means you should consider a different car. As for price, large pickup trucks and SUVs have seen the biggest increases, while smaller cars, sedans, hatchbacks, and front-wheel drive SUVs have had smaller price hikes. 

    Factor in your trade-in. Upgrading to a vehicle with better fuel efficiency, more up-to-date safety features, and even just more comfort or style can be compelling reasons to buy a new car. If you have a car to trade in or sell before buying something new, you may still be able to leverage its value against the elevated price of new cars.

    It’s worth pointing out, though, that used car values fall, and the car you have to trade in might be worth less than what you still owe on it. In that case, it’s probably better to hold on to what you have.

    Head shot of CR Autos Editor, Benjamin Preston

    Benjamin Preston

    Benjamin Preston has been a reporter with the Consumer Reports autos team since 2020, focusing on new and used car buying, auto insurance, car maintenance and repair, and electric bikes. He has covered cars since 2012 for the New York Times, Time, the BBC, the Guardian, Road & Track, Car and Driver, Jalopnik, and others. Outside CR, he maintains his own small fleet of old cars and serves as a volunteer firefighter, specializing in car crash response and vehicle extrication.