2B ❚ THURSDAY, JUNE 3, 2021 ❚ USA TODAY
Car prices
Continued from Page 1B
sword.
“From a profitability standpoint,
things have never been better. (Custom-
ers) are definitely paying MSRP or
more,” he said, referring to the manufac-
turer’s suggested retail price. “(But)
costs are through the roof ... The only
positive light is if you want to sell,
there’s no better time to sell.”
Buyers need to plan ahead
Inventory at dealerships is tighter
than during the 2019 GM strike or the
COVID-19 shutdowns last year, said Ka-
tie Bowman Coleman of Bowman Chev-
rolet near Clarkston, Michigan. She said
she’s advising drivers to get in touch at
least six months from when they need a
new car.
“That’s the timeline now to place an
order, to get in the queue to get exactly
what you want,” Coleman said. “There’s
still vehicles coming in all the time, but
most of them are spoken for.”
Experts say being flexible can mean
the difference between getting a vehicle
now or having to wait. It can help, too, if
car buyers are willing to consider more
than one model.
“People are kind of discovering new
models they didn’t necessarily think
they were coming in to buy,” she said.
The dealership uses a vehicle track-
ing system from GM that helps monitor
what’s available and where a specific
vehicle is. That way, if someone can’t
wait for a specific vehicle, she can see
what else is available.
“We really just are trying to, customer
by customer, assess their needs, go over
options and be right there by their side
as we’re trying to figure it out,” Coleman
said, noting that options can include ex-
tending a lease, giving someone a loaner
or directing them to other models.
The dealership’s vehicle buying team
is “more active now probably than ever,”
she said.
“We certainly go after everything we
can. It’s not easy. It’s tough out there.
Everyone’s holding on to what they
have.”
She noted that the dealership sold
about 300 new and 120 used vehicles
last month. It’s usually higher, but that’s
still a good month, she said.
Coleman said she’s heard from dealer
friends of examples of people paying
more than the MSRP for a car.
Do car customers have leverage?
Consumers do have some protection
against uncertainty in this tight market.
GM, for instance, offers a way to lock
in a current incentive if a specific vehi-
cle a consumer is buying isn’t ready yet.
The deal does not prevent a buyer from
claiming a better incentive if that’s
available when the vehicle arrives. GM
spokesman Dave Caldwell said the offer
is handled through an incentive ac-
knowledgment form.
Nicole Urban of Oakland County in
Michigan recently visited the Bowman
Chevrolet dealership planning to buy a
used vehicle to replace her 2011 Mazda.
But Urban, who works in the health care
industry, opted for a lease instead.
After test-driving a Trailblazer and a
Blazer, she decided to lease a black 2021
Blazer because she preferred the larger
size and it was a cheaper monthly pay-
ment. This was Urban’s first time shop-
ping at a dealership; she bought the
Mazda from her parents, and although
Urban said she loved the car, she wanted
a new vehicle with the latest safety fea-
Travel
Continued from Page 1B
well. If you’re unvaccinated, the answer
to the ethical question may be no.
If you’re still on the fence about tak-
ing a summer vacation, it’s time to ask if
a trip is right. And not just right for you,
but right for everyone else as well.
“Travel is ethically OK only if you can
reasonably believe that the advantage
you gain from travel is not outweighed
by the health risk you pose to yourself
and others,” says John Hooker, who
teaches business ethics and social re-
sponsibility at Carnegie Mellon Univer-
sity’s Tepper School of Business.
If you’re unvaccinated, the answer to
the ethical question may be no. Which is
to say, you may endanger yourself and
others by taking a vacation – especially
if it’s one of those maskless spring break
romps we saw in Florida. But if you are
vaccinated and you practice social dis-
tancing, a summer vacation might be
right for you.
While domestic destinations may be
Nicole Urban of Oakland County, Mich.,
stands with her dog, Sadie, by her 2021
Chevrolet Blazer. She initially was
planning to buy a used vehicle but
ended up leasing the Blazer from
Bowman Chevrolet.
PROVIDED BY NICOLE URBAN
tures.
“What I liked most was that the
salespeople were honest about the mar-
ket and how the parts shortages were
affecting what models were readily
available,” she said.
At Matick Automotive Group in
Michigan, Paul Zimmermann, vice
president and owner, said availability
for some models appears to depend on
how many extra features they have.
Extras are scarce
Cars with heated seats, heated steer-
ing wheels and navigation tend to be af-
fected because more options mean a
greater need for chips.
Zimmermann’s Chevrolet and Toyota
dealerships in Michigan aren’t seeing as
many high-end pickups, for instance,
and inventory is “severely constrained”
at the moment.
“I would say we probably have 35% of
what we would typically have available
to us on the Chevy end and maybe 50-
60% available on the Toyota side,” Zim-
mermann said.
He noted that GM and Toyota appear
to be taking different approaches. GM
has been trying to protect its hottest
models, and Toyota has slowed its deliv-
eries but not greatly reduced specific
models.
With prices up on new cars, used cars
have followed suit.
Zimmermann called it Economics
101. When demand and prices increase
for new cars, the same happens for the
used market.
A deal to be had
While no one likes to pay more for
their vehicles, higher prices mean cus-
tomers get more for their trade-ins.
“It’s not a negative, I think, for the
consumer because they’re getting more
for the asset they’re selling, trading in.
In some respects, they’re getting more
than they otherwise probably would
have in the past or I’d say normal times.
Yet they might pay more for the new, so
in some respects, it’s a little bit of a
wash,” Zimmermann said, noting the
situation is affecting leases, too.
Zimmermann said many customers
typically get out of their leases early, but
the current climate has shifted that
even more. Customers are making a
change earlier than normal or at least
considering it because of concerns
about what the inventory will look like,
and the dealerships are interested in
getting cars back so they can add to their
stock.
“We‘ve had a number that have prob-
ably been a year out, that we have
bought them out of that vehicle early to
take advantage of putting that vehicle
on our used car lot and then conversely
the customer has relieved themselves of
any concern for what the future looks
popular this summer, they aren’t your
only choices. You can stay in this hemi-
sphere and still have an international
summer vacation.
It may also be a practical question.
Consider what happened to Jerry Flake
and his wife. Last year, they had big
plans for their summer vacation, with
trips to South Korea, New Zealand and
Hawaii. They had to cancel all of them.
The pandemic made them rethink
their summer 2021 itinerary. In the
hopes of going somewhere more cancel-
lation-proof, the Flakes planned more
modest trips to Colorado and Utah.
They’ll be taking a road trip and visiting
national parks.
“I’m hoping others are as observant
about health safety as we are,” says
Flake, a retired insurance company
owner from Wilmington, North Caroli-
na.
Says Rajeev Shrivastava, CEO of
VisitorsCoverage:
“While domestic travel may be the
safest choice for some, countries such
as Iceland are now waiving quarantines
for those who are fully vaccinated,” he
says, though he notes that country does
like to potentially deal with a shortage in
eight, nine, 10 months if that’s when
they were going to get out of it,” Zim-
mermann said.
Why are used-car prices high?
There might be no better time to sell a
vehicle, but the cost to buy is up, too.
The average listing for used cars “sur-
passed the $22,000 mark for the first
time ever in April, closing the month at a
new high of $22,568,” and average
transaction prices on new vehicles are
up as well, to $40,768, an $864 increase
from April 2020, according to Cox Auto-
motive.
“It’s really basic economics,” said Mi-
chelle Krebs, executive analyst at Cox
Automotive.
The chip shortage is hitting inven-
tories at a time of high demand, but pro-
duction never fully rebounded after the
pandemic started. The annual fluctua-
tions in the vehicle market are still at
play as well, but new pressures have en-
tered the picture this year, she said.
“Used car sales and used car prices
always go up when the tax refunds are
coming in. This time you have the dou-
ble whammy of tax refunds and the
stimulus,” Krebs said, referencing the
direct payments to Americans that were
part of the federal government’s efforts
to boost the economy.
The chip shortage, Krebs said, got its
start when automakers and suppliers
responded to the initial phase of the
pandemic by canceling orders for chips
because they assumed demand would
crash.
“But demand was stunningly strong,”
she said.
What happened to the chips?
Although many people suffered fi-
nancial losses related to the pandemic,
the impact was not felt evenly across
the economy. Some people had more
money on hand, which they could spend
on vehicles, in part, because they
weren’t spending as much on such
things as entertainment. Personal vehi-
cles became the go-to choice for those
with money and concerns about social
distancing on other forms of transpor-
tation.
When those in the auto industry tried
to reinstate their chip orders, makers of
video games and other electronics were
already in line, Krebs said.
“It’s just almost like the perfect
storm,” said Martin French, the U.S.
managing director for Berylls Strategy
Advisors.
Consumer electronics, with people
stuck at home and working more than
ever on screens, quickly filled the void in
chip orders. But the chip supply was
also hit by unexpected difficulties, such
as a fire at a plant in Japan this spring,
Martin said. Now, the optimism of a re-
opening economy in the United States
and the United Kingdom, for instance,
added even more pressure.
“There’s so much pent-up demand
for products, to spend money, to get a
new car, to get a new phone, to get new
product in the household,” French said.
“It’s all coming together, and the indus-
tries are going to be fighting each other
quite frankly for these products because
you just can’t build a manufacturing
plant or extend them big enough for
these parts that are in such short sup-
ply.”
The chip shortage is one part of a se-
ries of unexpected challenges.
“We just can’t (get) our hands on that
tiny, tiny little chip that goes in and
makes so many of the components
work, and then if we can, then there’s a
storm in Dallas or a fire in Japan or
require all visitors to be tested upon ar-
rival.
So for some Americans, the answer to
the question, “Should I take a summer
vacation?” is yes.
“After a year and a half of isolation
and social distancing, the industry will
be open and ready to go,” says Jon
Grutzner, president of the tour opera-
tors Insight Vacations and Luxury Gold.
As more people get vaccinated, and
as cases go down, he says people will
become more confident and willing to
travel again. “Things continue to
evolve.”
And for summer travelers, it’s a good
kind of evolution.
What to do before you go
h Review the warnings and adviso-
ries. “An important checklist item for
international travel is to review the cur-
rent requirements for the country you’re
planning to visit,” says Sherry Sutton,
vice president of marketing at Travel In-
sured International. That includes trav-
el advisories from the State Department
and the Centers for Disease Control, as
MONEY
there’s another war breaking out or a
trade war going on,” French said. “You
just can’t make this up.”
Missing parts
Bruce Wendt, 69, of Romeo, Michi-
gan, started shopping for a new pickup
this month before pausing.
He has 72,000 miles on his 2015 Ford
F-150 despite taking it on an annual
round trip to Arizona six times. It’s a
4,200-mile trek and he’d like to upgrade
to a V-8 engine, plus he is intrigued by
the 2021 GMC Sierra’s new multi-pro
tailgate.
He went to three local dealerships
and quickly learned that the vehicle he
wanted was being made without the
fuel management module, which boosts
fuel economy, due to the chip shortage.
“They had a truck I liked, and I was
ready to pull the trigger on it, but it just
didn’t feel right,” Wendt said. “It felt like
I didn’t have all the facts.”
For one thing, the dealers couldn’t tell
him whether GM could install the fuel
management module on the pickup af-
ter he bought it if it came into supply.
The answer is no, according to GM.
And GM is taking only $50 off the
price of the pickup if it lacks the fuel
management module, Wendt said. It’s
hardly a savings because “you chew that
up in gas in no time,” he said.
“I started thinking about ... a couple
of things I wanted that I can’t get be-
cause of the chip shortage,” Wendt said.
“You can’t get the lane alert, that’s
something they don’t have. I can live
without that, but the V-8, if it doesn’t
have that Dynamic Fuel Management
and it gets like 16 MPG, it’s not that
good.”
Despite a dealer offering Wendt
$23,500 for his F-150 trade-in, which he
considered generous, Wendt said he’ll
keep it for now.
GM isn’t the only company that has
changed the features in its vehicles in
response to the chip crisis.
Stellantis, the company formed from
the merger of Fiat Chrysler Automobiles
and Peugeot-maker PSA Group, has
made its own adjustments. The Wall
Street Journal, quoting a dealer, report-
ed that the company shipped some
trucks “without an electronic blind-spot
detection system.” There have been oth-
er reports about changes to the Ram
1500, as well, but the company has re-
fused to shed light on the issue to the
Free Press, providing a general com-
ment that “Stellantis employees across
the enterprise are finding creative solu-
tions every day to minimize the impact
to our vehicles.”
The unnamed dealer representative
who spoke to the Free Press said his
Ram dealership can’t order one partic-
ular option package, but the Ram 1500s
that have been arriving at the dealership
have not been missing any parts.
Ford spokesman Said Deep said the
automaker is “not currently building
and shipping products without certain
equipment and features, but we’re look-
ing at it closely.”
Sam Fiorani, vice president of Global
Vehicle Forecasting for AutoForecast
Solutions, explained that these kinds of
changes are based on a clear rationale.
“With the Active Fuel Management
system removed from the Chevrolet Sil-
verado and GMC Sierra pickups, GM can
continue to build some of its trucks.
Nissan has removed navigation from
some of its products and Stellantis is
swapping digital instrument clusters for
analog clusters in the Peugeot 308 com-
pacts.”
Phoebe Wall Howard and Christina
Hall contributed to this report.
well as outside sources, such as those
from the Canadian government. Read
before booking.
h Check your travel insurance.
Each destination differs in how it
chooses to respond to guidelines and
limitations on travel, says Jeremy Mur-
chland, president of Seven Corners.
“There’s always a possibility that your
travel plans may take an unexpected
turn,” he adds.
He recommends reviewing your in-
surance to make sure it covers cancella-
tions and interruptions.
“Adding a travel insurance policy
with an interruption for any reason ben-
efit could be the perfect answer for
those who are concerned about safety of
summer travel,” he says.
h Be flexible. Patience is perhaps the
most important thing to pack this sum-
mer. “While many destinations are de-
lighted to have travelers return, that
doesn’t necessarily mean that all hotels
and resorts are staffed at normal levels,”
says Kate Sullivan, a travel adviser with
Embark Beyond. “If the occasional ser-
vice snafu drives you nuts, you might
want to wait a bit.”