What You Should Know When Buying a New Vehicle

To explore recent developments in the auto industry, we interviewed our Director of Fleet Management, Brad Forbush. Brad has 40 years of experience in the auto industry and 10 years of service at Caritas Vehicle Services.

The conditions of the automotive marketplace have changed dramatically since the beginning of the Covid pandemic and the global supply chain crisis.  In our interview, Brad recommends strategies that will help when you need to purchase a new vehicles despite certain challenges in today's market.

Q: What are the significant challenges in managing transportation for Religious Communities today?

Brad:  Well, over the past five years, we've seen significant changes unfold both in regard to our client's transportation needs, and also within the auto industry.  Religious communities continue to downsize their fleets as the average age of their drivers increases and more drivers retire from driving.  Communities now have more members who no longer drive, so in addition to providing vehicles for those who do drive, we help clients develop plans for utilizing a diverse mix of mobility services such as shuttle buses, volunteer drivers, ridesharing, carpooling, and even public transit.

Another significant change that we're managing effectively is the limited availability of news cars; there are very few new cars on dealers’ lots today. Dealers that usually have 200 new vehicles in stock may now have only 20 or 30. In addition, many fleet programs have placed restrictions on placing new vehicle orders. This all adds up to a serious shortage of new vehicles caused by supply chain issues that are inhibiting vehicle production.

Q: What do you recommend to clients regarding the new car shortage?

Brad: Plan ahead and allow for much more lead time, -- at least several months. The further you can plan ahead, the better. Caritas Vehicle Services IS able to find vehicles to suit your needs, but in today's market we require more time to complete a search than we did in past years. When a replacement vehicle is needed right away, we also have the option to expand our search to  include pre-owned vehicles that are one or two years old with low mileage. 

Q: How has the shortage affected the cost of new cars?

Brad: Prior to the pandemic, we could purchase vehicles for well below the factory invoice price. Today, you must be prepared to pay the factory MSRP (window sticker price) for a new vehicle. In major metro markets, many dealers are selling vehicles for well over the sticker price by adding a so-called "market adjustment," which I believe is a rather unfair practice. Fortunately, Caritas can still acquire new vehicles without paying a dealer's market adjustment, and our fleet program also makes it possible to offset the higher new car prices through our remarketing process. 

Q: What can Communities do to deal with these pricing issues?

Brad:  We don't have much control over current market forces that are causing the increase in new car prices, however, it's important to be aware of this issue, and to factor the higher cost into your annual fleet budget.  The new vehicle market is expected to make a gradual return to more normal conditions, but this will take another year or possibly longer. 

Q: How is the current market affecting the value of a community's existing fleet?

Brad: When it comes to selling your old vehicles, there is finally some really good news. In today’s market, used cars in good condition are selling for 30-40% more than they would in a normal market. The restricted supply of new vehicles has created a very high demand for used vehicles. This helps to offset the higher new car prices.

Here's an example: Caritas recently sold a client's 2015 Honda Civic with just 32,000 miles at the Manheim auction for a price of $16,500. This car was purchased when it was new for $$21,000. In a normal market, this vehicle would have sold at auction for about $12,000. The $4,500 gain on the used Civic helped to offset the higher price that was paid the the new replacement vehicle, so while both new and used car prices are at record highs today, the net result is that clients can still come out ahead when they acquire new vehicles through the Caritas fleet management program. 

Whenever there are major changes to a market, there are also new opportunities. Our job at Caritas Vehicle Services is to identify these opportunities and then make recommendations to our  clients accordingly.

If you have any questions or need help selling or buying a vehicle, please reach to Brad Forbush via email at bforbush@fleetservices.com or call Caritas Vehicle Services at (414) 771-7030. Otherwise, happy trails and always remember to buckle up!