Buy a new car now or wait?

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Planner01
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Buy a new car now or wait?

Post by Planner01 »

Wait to buy a car or pull the trigger.

I drive a Lexus IS 2011 with ~123k miles. Which I bought new. I like the car and it has never giving me any problems. The plan is to pass it down to the teen and then I will buy a new car. Another Lexus.

We are also in the middle of buying the materials to finish some home renovations (kitchen and flooring) which will be done in June. Total cost $125k. Ideally I wanted to wait until the home renovations were done and all paid for. Meanwhile I was going to share my car with the 17 year old until July.

However, I am getting impatient and want to buy a new car in December when the new RX comes out. My car is in good condition but recently the teen scraped the side pulling out of a parking spot. The little dents and scratches just keep piling.

I keep thinking that I should wait to save on the insurance and the new car purchase expense until the home renovations are done. But on the other hand, I’ve been wanting to buy a new car for the last three years and I always put it off until we do this or that. There’s always something to wait on. I calculated that if I wait until the end of next year I could potentially save $8k on insurance and extra expenses for the car and then get the 2024 model. Which will be a year after the new design (good) and the chip shortage should have subsided by then.

But then again, I am always waiting…

A few things to note:
- Mid 40s
- We can afford to buy this car. I will put $10k down and then pay the regular monthly payments until the renovations are done and then pay $10k a month until is paid off.
- Income is over $500k (recently both got a big jump int our salaries)
- While renovations are in place we are saving $140k a year. Will be able to do more after all these extra expenses are done.
- Investable retirement assets $1.6M
- Taxable brokerage $270k
- $1M home equity before renovations are completed
Last edited by Planner01 on Wed Sep 21, 2022 8:10 am, edited 6 times in total.
123
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Re: Buy a new car now or wait?

Post by 123 »

Planner01 wrote: Tue Sep 20, 2022 6:14 pm ...Income is over $500k...
Buy the new car, you are agonizing over pocket change.

Edited to add:

We have multiples of your assets but I agonize as well about a few body repairs needed on a 15+ year old car that works well versus just buying the replacement vehicle we will buy eventually. I find it hard to accept paying much higher insurance premiums when I could squeeze a couple more years of life out of the decrepit vehicle.
Last edited by 123 on Tue Sep 20, 2022 6:32 pm, edited 2 times in total.
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j9j
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Re: Buy a new car now or wait?

Post by j9j »

123 wrote: Tue Sep 20, 2022 6:26 pm
Planner01 wrote: Tue Sep 20, 2022 6:14 pm ...Income is over $500k...
Buy the new car, you are agonizing over pocket change.
I was going to say wait until I got to the income line. Lol, buy the new rx and ski get the teen a new car.
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Metsfan91
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Re: Buy a new car now or wait?

Post by Metsfan91 »

Buy. No need to wait. Good luck with new car!
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Topic Author
Planner01
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Re: Buy a new car now or wait?

Post by Planner01 »

123 wrote: Tue Sep 20, 2022 6:26 pm
Planner01 wrote: Tue Sep 20, 2022 6:14 pm ...Income is over $500k...
Buy the new car, you are agonizing over pocket change.

Edited to add:

We have multiples of your assets but I agonize as well about a few body repairs needed on a 15+ year old car that works well versus just buying the replacement vehicle we will buy eventually. I find it hard to accept paying much higher insurance premiums when I could squeeze a couple more years of life out of the decrepit vehicle.
You get me. I can be a penny pincher. When I calculated how much I can save in insurance by adding a third car and a teen driver, I paused and that’s what hit me thinking if I should wait ANOTHER year.
smashsc
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Re: Buy a new car now or wait?

Post by smashsc »

Couple of things to keep in mind:

Although the new RX is supposed to be available by the end of this year, Lexus is still constrained on the number of vehicles they can produce. If the desired color/trim you are looking for is not in stock, you may need to order one and maybe not getting it until July, anyways.

From a "what's best for the consumer" p.o.v., given that you have a well-running vehicle, deferring your purchase until the supply chain constraints loosen more will benefit more people (besides yourself) as the Dealer Markup surcharges should diminish over time. A general "buyers strike" for new vehicles by people who don't NEED a new one will serve to align the supply/demand more quickly than otherwise.

Whatever your choice is, I hope you enjoy your new ride once you get it!
Jack FFR1846
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Re: Buy a new car now or wait?

Post by Jack FFR1846 »

A good way to see how shortages are affecting YOUR local dealers is to go on their website, click new vehicles and it'll give you a total. If it's an unbelievable low number (My Cadillac dealer's number is 5), believe it. If it's closer to normal, look through the cars and look for "in transit" or the like. The Japanese manufacturers have been extremely hard hit by the Renesas issues. Renesas makes microprocessors and other chips in Japan and was hit early this year with a fab fire and then 2 fabs were hit by the tsunami in March. Toyota has said they are building a million less cars than originally projected and Honda is down to 40% production with a closed down factory and they are asking employees to give back bonuses.

My Lexus dealer who normally has about 200 new cars on the lot shows 35. 6 are in transit, so not even there. 10 say already sold, including some in transit. So you may need to buy a car that has not arrived yet. If this is a revised model year car, it's demand will be high and this will likely mean a lot over MSRP and/or a long wait. Dealers tend to take their slow allocation one of 2 ways. Sell at MSRP, but customers get in line and this can be over a year for some vehicles. Or added money over MSRP. My local Ford dealer, for example is selling Mustang Mach e electric vehicles for MSRP plus $25k. The Cadillac dealers are selling Escalades for $30k over MSRP. A plus is that if you call a dealer, they will now actually tell you what the price will be over the phone as they are quite firm on their numbers.

Will it get better if you wait. Yes. I hear all kinds of funny things out there about chips not really being a shortage or questioning why the car companies don't make their own chip. I work for a chip company. There really is still long lead times to get parts. Smart customers (car companies) who never cancelled orders during Covid and are with good suppliers don't have an issue as the suppliers kept the parts designated for these customers. Tesla comes to mind. But others who did cancel orders of not just chips but dash boards and fenders and everything are in deep doo doo because all of their suppliers went looking for others to buy their products. We had an example given to us during a company wide call. A dashboard maker found a customer doing blister packs for products. And since these are more profitable and the customers are less of a problem, when the auto makers came back and said "time to make dashes again", the answer was "no thanks".

Some companies don't have as much of an issue. Tesla, BMW come to mind. Checking dealer lots will give you good info.
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Planner01
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Re: Buy a new car now or wait?

Post by Planner01 »

Jack FFR1846 wrote: Tue Sep 20, 2022 7:30 pm A good way to see how shortages are affecting YOUR local dealers is to go on their website, click new vehicles and it'll give you a total. If it's an unbelievable low number (My Cadillac dealer's number is 5), believe it. If it's closer to normal, look through the cars and look for "in transit" or the like. The Japanese manufacturers have been extremely hard hit by the Renesas issues. Renesas makes microprocessors and other chips in Japan and was hit early this year with a fab fire and then 2 fabs were hit by the tsunami in March. Toyota has said they are building a million less cars than originally projected and Honda is down to 40% production with a closed down factory and they are asking employees to give back bonuses.

My Lexus dealer who normally has about 200 new cars on the lot shows 35. 6 are in transit, so not even there. 10 say already sold, including some in transit. So you may need to buy a car that has not arrived yet. If this is a revised model year car, it's demand will be high and this will likely mean a lot over MSRP and/or a long wait. Dealers tend to take their slow allocation one of 2 ways. Sell at MSRP, but customers get in line and this can be over a year for some vehicles. Or added money over MSRP. My local Ford dealer, for example is selling Mustang Mach e electric vehicles for MSRP plus $25k. The Cadillac dealers are selling Escalades for $30k over MSRP. A plus is that if you call a dealer, they will now actually tell you what the price will be over the phone as they are quite firm on their numbers.

Will it get better if you wait. Yes. I hear all kinds of funny things out there about chips not really being a shortage or questioning why the car companies don't make their own chip. I work for a chip company. There really is still long lead times to get parts. Smart customers (car companies) who never cancelled orders during Covid and are with good suppliers don't have an issue as the suppliers kept the parts designated for these customers. Tesla comes to mind. But others who did cancel orders of not just chips but dash boards and fenders and everything are in deep doo doo because all of their suppliers went looking for others to buy their products. We had an example given to us during a company wide call. A dashboard maker found a customer doing blister packs for products. And since these are more profitable and the customers are less of a problem, when the auto makers came back and said "time to make dashes again", the answer was "no thanks".

Some companies don't have as much of an issue. Tesla, BMW come to mind. Checking dealer lots will give you good info.
Well I have no problem putting an order and waiting how many months is necessary. What I won’t do is pay over $5k over MSRP. $5k is my threshold. That’s ridiculous. But I can see it happening and it’s a long waited redesign. Maybe that’s what is going to be the deciding factor if to buy it this year or wait until next year. At least I will make an attempt now and see what happens.
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Watty
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Re: Buy a new car now or wait?

Post by Watty »

123 wrote: Tue Sep 20, 2022 6:26 pm
Planner01 wrote: Tue Sep 20, 2022 6:14 pm ...Income is over $500k...
Buy the new car, you are agonizing over pocket change.
+1000
Planner01 wrote: Tue Sep 20, 2022 6:14 pm I drive a Lexus IS 2011 with ~123k miles. Which I bought new. I like the car and it has never giving me any problems. The plan is to pass it down to the teen and then I will buy a new car. Another Lexus.
That car was likely pretty good safety wise for 2011 but there have been a lot of advances in car safety since then so it would be good to research getting your teen a different car which has more modern safety features.

Car insurance costs can vary by more than you might expect with different car models. Last year I replaced a 2018 Corolla with a 2021 Forster which was worth about twice as much. Much to my surprise my car insurance went down by about 20 percent and my insurance agent said that was because the Forester had a much better safety rating in their internal rating database.

It would be good to get some car insurance quotes for different cars for your teen.

Realistically for your situation money is not a factor and so it would be good to consider what car you would buy for your kid if your 2011 Lexus was just one of hundreds of cars that you could select for him or her to drive.

Buying a different car for your kid may cost a few bucks and the car insurance may be higher but if you can afford to spend $125k on a kitchen remodel you can afford a safe car for your kid.
Valuethinker
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Re: Buy a new car now or wait?

Post by Valuethinker »

Jack FFR1846 wrote: Tue Sep 20, 2022 7:30 pm

Will it get better if you wait. Yes. I hear all kinds of funny things out there about chips not really being a shortage or questioning why the car companies don't make their own chip. I work for a chip company. There really is still long lead times to get parts. Smart customers (car companies) who never cancelled orders during Covid and are with good suppliers don't have an issue as the suppliers kept the parts designated for these customers. Tesla comes to mind. But others who did cancel orders of not just chips but dash boards and fenders and everything are in deep doo doo because all of their suppliers went looking for others to buy their products. We had an example given to us during a company wide call. A dashboard maker found a customer doing blister packs for products. And since these are more profitable and the customers are less of a problem, when the auto makers came back and said "time to make dashes again", the answer was "no thanks".

Some companies don't have as much of an issue. Tesla, BMW come to mind. Checking dealer lots will give you good info.
This whole post was such a lovely summary of what's going on out there. At least to a non-expert outsider.

I don't know about individual car companies... Honda and Toyota problems are well known.

But I do know about chip lead times-- at least 20 years ago I did. The chip making supply chain is vast and complex. For example the chip may be made on a "fab" in Taiwan. The design tools would be American (Cadence) software. The packaging would be done in Malaysia...the silicon wafer might come from somewhere in Europe. The etching machinery (?) is made by a Dutch company (ASML)-- the largest tech company you have probably never heard of (it's one of the largest companies by market cap in Europe).

Any hiccough in that chain, and it all backs up and can take months (years?) to unsnarl.

We are in a situation where demand fundamentally exceeds supply. This is a crunch that is not quickly resolved because it involves repurposing and rebuilding production lines (potentially) and hundreds of different players.

The war in Ukraine has also hit European car makers. VW for example sourced wiring harnesses from Ukraine. When all the men in your factory down tools and report for military duty... a nation mobilised in a common purpose for war is a sight beautiful and terrible to behold. A lot of the industry in Ukraine is either Russian occupied or on the front lines.
Valuethinker
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Re: Buy a new car now or wait?

Post by Valuethinker »

Planner01 wrote: Tue Sep 20, 2022 6:14 pm Wait to buy a car or pull the trigger.

I drive a Lexus IS 2011 with ~123k miles. Which I bought new. I like the car and it has never giving me any problems. The plan is to pass it down to the teen and then I will buy a new car. Another Lexus.

We are also in the middle of buying the materials to finish some home renovations (kitchen and flooring) which will be done in June. Total cost $125k. Ideally I wanted to wait until the home renovations were done and all paid for. Meanwhile I was going to share my car with the 17 year old until July.

However, I am getting impatient and want to buy a new car in December when the new RX comes out. My car is in good condition but recently the teen scraped the side pulling out of a parking spot. The little dents and scratches just keep piling.

I keep thinking that I should wait to save on the insurance and the new car purchase expense until the home renovations are done. But on the other hand, I’ve been wanting to buy a new car for the last three years and I always put it off until we do this or that. There’s always something to wait on. I calculated that if I wait until the end of next year I could potentially save $8k on insurance and extra expenses for the car and then get the 2025 model. Which will be a year after the new design (good) and the chip shortage should have subsided by then.

But then again, I am always waiting…

A few things to note:
- Mid 40s
- We can afford to buy this car. I will put $10k down and then pay the regular monthly payments until the renovations are done and then pay $10k a month until is paid off.
- Income is over $500k (recently both got a big jump int our salaries)
- While renovations are in place we are saving $140k a year. Will be able to do more after all these extra expenses are done.
- Investable retirement assets $1.6M
- Taxable brokerage $270k
- $1M home equity before renovations are completed
Order the car. If it's a Lexus you may have a bit of a wait.
hudson
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Re: Buy a new car now or wait?

Post by hudson »

Planner01,
You can afford to do it however you want.
If I was exactly in your shoes, I wouldn't borrow a dime now or later. My personal preference.
mw1739
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Re: Buy a new car now or wait?

Post by mw1739 »

You can certainly afford it now. I too am interested in the new RX, but if size is an issue you may consider waiting for the TX scheduled for the 2024 model year.
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Planner01
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Re: Buy a new car now or wait?

Post by Planner01 »

mw1739 wrote: Wed Sep 21, 2022 6:04 am You can certainly afford it now. I too am interested in the new RX, but if size is an issue you may consider waiting for the TX scheduled for the 2024 model year.
I had not heard of the TX. I just looked it up and it’s intended to be bigger than the RX. I certainly don’t need bigger. I actually like the NX as it reminds me of my IS on the interior. But I want the RX for a little extra room, but nothing bigger than that.
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Planner01
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Re: Buy a new car now or wait?

Post by Planner01 »

hudson wrote: Wed Sep 21, 2022 5:20 am Planner01,
You can afford to do it however you want.
If I was exactly in your shoes, I wouldn't borrow a dime now or later. My personal preference.
What’s interesting is that we don’t feel wealthy. Not that we categorize our income this way but if I were to divide it, it would look like this: Half of my income is to pay taxes and home renovations. Half of my husband’s income is for living expenses and savings. Once we are done with all the renovations, we will just increase our savings even more.
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Watty
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Re: Buy a new car now or wait?

Post by Watty »

Planner01 wrote: Tue Sep 20, 2022 7:35 pm Well I have no problem putting an order and waiting how many months is necessary. What I won’t do is pay over $5k over MSRP. $5k is my threshold. That’s ridiculous. But I can see it happening and it’s a long waited redesign. Maybe that’s what is going to be the deciding factor if to buy it this year or wait until next year. At least I will make an attempt now and see what happens.
Be cautious about buying a car the first year after a major redesign. They often have more problems.

After buying a Subaru last year I vaguely watch the Subaru marketplace. My general impression is that they are trying to keep their dealers from selling cars way over MSRP. Their cars that are made in Japan are in very short supply but I recall hearing that some of their cars that are made in the US, like the Outback and Legacy, are not too hard to get if you are willing to wait a few months for delivery.

It might make sense to just buy a car like that and use it for a few years then upgrade cars in a few years when the car market may be more normal.
sidr
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Re: Buy a new car now or wait?

Post by sidr »

Planner01 wrote: Tue Sep 20, 2022 6:14 pm Wait to buy a car or pull the trigger.
You can do both! Buy a car and wait! We ordered a Ford Mustang Mach E (EV) 9 months ago, and it just arrived at the dealer. It worked out fine for us because we get the financing rates from 9 months ago, the 2022 federal tax credit for this EV (thank goodness), and avoid the 12% increase in price for the 2023s....
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Planner01
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Re: Buy a new car now or wait?

Post by Planner01 »

With the looming economic talk this week, it makes me push this back another year yo finish with the home re ist ions before taking on another big expense. I get very nervous and like to play it safe. I am content but sometimes I know that I can enjoy our hard earned money more. But I worry too.
Leesbro63
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Re: Buy a new car now or wait?

Post by Leesbro63 »

The OP has two different issues going on. One is whether to buy a new car now. The other is that he wants a new-bodysyle-for-2023 Lexus RX. I also would like to trade my 2020 Lexus RX for the new bodystyle 2023. But I've pretty much decided not to do so until the market at least somewhat normalizes and I can pick a car from a big lot full of them. But the OP said he didn't care about ordering and waiting and was willing to spend up to $5K over sticker. Based on his financial situation and the fact that he keeps cars for a long time, I'd say to go for it.
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HMSVictory
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Re: Buy a new car now or wait?

Post by HMSVictory »

Lexus makes a fantastic vehicle. It is a very good value especially when you hold it for the long term (like you have).

The newly redesigned RX will be very nice (go with the hybrid model for more power) and wait for 2024 to let them work the kinks out.

Also I'm sorry but you should not be financing a car making 500k a year. Pay cash and keep it moving.
Stay the course!
hudson
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Re: Buy a new car now or wait?

Post by hudson »

Planner01 wrote: Wed Sep 21, 2022 8:20 am
hudson wrote: Wed Sep 21, 2022 5:20 am Planner01,
You can afford to do it however you want.
If I was exactly in your shoes, I wouldn't borrow a dime now or later. My personal preference.
What’s interesting is that we don’t feel wealthy. Not that we categorize our income this way but if I were to divide it, it would look like this: Half of my income is to pay taxes and home renovations. Half of my husband’s income is for living expenses and savings. Once we are done with all the renovations, we will just increase our savings even more.
I would watch my spending until reaching my retirement goals. I think that is already your plan.
FellsGuy
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Re: Buy a new car now or wait?

Post by FellsGuy »

Sounds like it is something you would really like to have so I say order it up. Life is today not 30-40 years from now. Many children and grandchildren are living very comfortably on money left behind by compulsive accumulators who lived miserably.
Leesbro63
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Re: Buy a new car now or wait?

Post by Leesbro63 »

Another point: You can almost certainly order the car and change your mind later. New 2023 RX vehicles will have high demand. Find a dealer who will refund your deposit if you change your mind. Sort of like a no-cost "call" option.
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