Have you tried to buy a luxury watch at any point in the last several years? As demand has exploded, many watchmakers have held supply steady, creating a thriving third-party sales environment with hugely marked-up watches. With few exceptions, it’s impossible to walk into a jeweler and buy a Rolex off the shelf. In most cases, the buyer has to place an order and wait months or years for their desired model to arrive, and that’s only if the jeweler is willing to accept their order. The situation in some parts of the automotive market is starting to look very much like the luxury watch world, and it only means bad news for everyday buyers.
First, we need to acknowledge the differences between luxury watches and cars. Even flashy, expensive vehicles can serve a purpose and can be used as daily transportation. There’s no world in which anyone needs a $200,000 Range Rover, but there are at least plenty of useful things the SUV brings in return for that outlay. On the other hand, it’s almost impossible to come up with practical reasons to buy a luxury watch.
Your Test Driver covered the markups on early 2023 Toyota GR Corolla deliveries, finding an average of $15,000. While supremely frustrating, long wait times, early orders, and markups for people who missed out on desirable performance cars are common. What you may not know, however, is that vehicle shortages have created similar situations for everyday cars.
Inventory is slowly recovering after a few years of COVID- and supply chain-driven hardships. However, supply is still constrained, and buyers still face similar choices to the ones jewelry stores give Rolex shoppers: Order what you want and wait or pay someone an inflated price.
To be clear, we’re not only complaining about markups here, but they’re the most harmful side effect of what’s happening. We’re talking about the newfound exclusivity of many mainstream auto models, such as the Toyota Sienna, Kia Soul, Honda CR-V Hybrid, and Toyota Tundra.
People can wait for a luxury watch purchase because they can’t drive a Rolex to work, but vehicle purchases can often be much more urgent. If a buyer desperately needs a truck for work or an SUV to take their kids to school, a six-month wait isn’t going to cut it. Under the current model, those people have few good options.
What this means for you
The best time to buy a car is when you need one, but inflated prices and limited supply mean it’s better to wait if you can. Many believe the situation could remain frustrating through much of 2023, with light at the end of the tunnel in the fall, but there’s a lot of time between now and then.
Shopping around is vital, and we don’t mean to dealers within a few minutes of your house. Be prepared to contact dealers across the country, and understand that you may have to pay a little more for shipping. Check out our guide on how to read internet sales listings to avoid spending hours calling dealers for vehicles that are sold or ordered by someone else. As part of your shopping process, search markups.org to see if the dealer or model you’re looking at has a history of markups. The crowd-sourced site lets car buyers share information on the best and worst dealers for price gouging.
Of course, the solution to all this is more supply, but we may never see the packed dealerships from years past. Some auto executives have advocated for a shift to online sales, and some have encouraged customers to order vehicles instead of shopping on the lot, so there doesn’t seem to be much pressure on the issue.