When it comes to car shopping these days, sticker price may mean sticker shock.
New and used car prices continue to spurt higher amid strong demand and tight inventory. While a manufacturing slowdown has improved slightly, there won’t be a return to normal anytime soon for car buyers.
“The typical dealership experience that consumers are familiar with — walking dealer lots with rows and rows of cars, negotiating over price and getting many incentives — is not likely to return this year because there are 4.5 [million] to 5 million consumers on the sidelines waiting for cars,” said Tyson Jominy, head of data and analytics for J.D. Power.
“This pent-up demand will keep inventories low and prices high throughout most of 2022,” Jominy said.
An ongoing global shortage of microchips — key components needed for today’s autos to operate — that began in 2020 continues to slow down manufacturers’ production of new vehicles, which has translated into demand outpacing supply.
“It’s slightly better in the sense that there is no more drop-off of inventory — it’s not getting any worse,” said Ivan Drury, senior manager of insights for Edmunds.com. “But we’re still talking many months out until it starts looking more normal.”
The average transaction price for a new car is now higher than the manufacturer’s suggested retail price, or MSRP: $45,872 versus $45,209, according to the most recent data from Edmunds.
An estimated 89% of shoppers are paying more than sticker price or within 5% of it, Jominy said.
Part of the reason for record transaction prices is that automakers have slashed their discounts because, generally speaking, they don’t need to offer big incentives to sell cars right now.
In other words, new cars aren’t hanging around long once they arrive on a dealer lot: In December, an estimated 57% of cars sold within 10 days of delivery, according to J.D. Power. The average time, overall, for a new car to sell from the lot is 17 days, a record low and down from 49 days a year ago.
Demand also has spilled into the used-car market, where buyers are paying an average $29,011, up 27.9% from a year ago, Edmunds’ data shows. That ranges from an average $14,124 for 9-year-old cars to $30,334 for a 3-year-old vehicle.
One bright spot, Drury said, is that the demand for used cars has pushed trade-in values well above normal.
“Shop that trade-in,” he said. “Don’t go off old assumptions about mileage or depreciation, because all that stuff is out the door.”
And while you should be prepared for there being little wiggle room on the price of the car, you may be able to negotiate on the value assigned to your trade-in.
Additionally, interest rates are generally low right now.
“You can still get money cheap,” Drury said, adding that there are still some 0% or 0.9% financing deals available, depending on the make and model you’re looking at. Otherwise, the average interest rate for a new-car loan is under 4%, according to Bankrate.
If you have flexibility in the timing of your purchase and are not finding what you want on dealer lots, it may be worth ordering your car.
“While it may take four to eight weeks for the vehicle to arrive, it will be built to your exact specifications, such as a trim and color,” Jominy said. “And now some automakers will offer incentives to pre-order that aren’t available to consumers buying what’s in stock.”
‘Minions: The Rise of Gru’ tops $108 million as parents flock back to cinemas, kids in tow
“Minions: The Rise of Gru” is the sequel to the 2015 film, “Minions,” and spin-off/prequel to the main “Despicable Me” film series.
Families have gone bananas for “Minions: The Rise of Gru.”
Over the weekend, the Universal and Illumination animated feature tallied more than $108 million in ticket sales.
The fifth film in the Despicable Me franchise generated an additional $93.7 million from international markets, bringing its estimated opening weekend haul to $202 million globally.
“With the incredible success of ‘Minions,’ the notion that family audiences were avoiding movie theaters due to Covid concerns can be shelved,” said Paul Dergarabedian, senior media analyst at Comscore.
Box office analysts had wondered if this segment of moviegoers was still avoiding cinemas after Disney and Pixar’s “Lightyear” took in just $51 million during its domestic debut last month, below expectations of $70 million and $85 million.
It was unclear if tough box office competition led to “Lightyear’s” less than stellar debut or if consumers were confused about the film’s release. After all, there has not been a theatrical release of a Pixar film since 2020′s “Onward.” The last three from the animation studio, “Soul,” “Luca” and “Turning Red,” were all released on streaming service Disney+.
“Minions: The Rise of Gru” represented 54% of all domestic moviegoers over the weekend, with 68% of ticket holders being part of family groups, according to data from EntTelligence.
“What this weekend has showcased is a triumphant return to cinemas by families, laying to rest any lingering and outdated pandemic narrative that parents and kids only want to watch movies at home,” said Shawn Robbins, chief analyst at BoxOffice.com. “When the right content is out there, people will show up.”
The film is expected to add another $20 million in ticket sales in the U.S. and Canada on Monday, bringing its holiday weekend total to $128 million.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is the distributor of “Minions: The Rise of Gru.”
American Airlines scheduling glitch allows pilots to drop thousands of July flights
An American Airlines Boeing 787-9 Dreamliner approaches for a landing at the Miami International Airport on December 10, 2021 in Miami, Florida.
Joe Raedle | Getty Images
A glitch in a scheduling platform allowed American Airlines pilots to drop thousands of July assignments overnight Saturday, their union said, a headache for the airline as it tries to minimize flight disruptions during a booming travel season.
American said it didn’t expect the problem to affect its operation, including during the busy July Fourth holiday weekend. The union and airline are now discussing additional pay for pilots whose dropped trips the airline reinstated, the Allied Pilots Association said.
“As a result of this technical glitch, certain trip trading transactions were able to be processed when it shouldn’t have been permitted,” the airline said in a statement. “We already have restored the vast majority of the affected trips and do not anticipate any operational impact because of this issue.”
More than 12,000 July flights lacked either a captain, first officer, or both, after pilots dropped assignments, the Allied Pilots Association said Saturday. APA said the airline reinstated about 80% of the trips.
Pilots can routinely drop or pick up trips, but time off in the summer or holidays is hard to come by for airline employees as schedules peak to cater to strong demand.
On Saturday alone, American had more than 3,000 mainline flights scheduled and they were 93% full, according to an internal tally. Flights left unstaffed, however, are an additional strain on any airline.
The glitch occurred during a rocky start to the Fourth of July weekend when thunderstorms and staffing issues caused thousands of U.S. flight delays and hundreds of cancellations.
A similar issue occurred in 2017, when a technology problem let American’s pilots take vacation during the busy December holiday period. The carrier offered pilots 150% pay for pilots that picked up assignments.
American and its pilots’ union, whose relationship has been fraught, are in the middle of contract negotiations and the airline most recently offered nearly 17% raises through 2024.
Union president Capt. Ed Sicher, who started his term Friday, told American’s roughly 15,000 pilots Saturday night that American Airlines CEO Robert Isom said he is committed to paying an “inconvenience premium” to aviators whose trips American put back on their schedules after the glitch.
“To Mr. Isom’s credit, he called me four times today to commit to mitigating the damage from this debacle,” Sicher wrote late Saturday. “We started at a 200% override, although the details of this pay are still the subject of negotiations and there is no guarantee of the details or the amounts.”
American Airlines declined to comment on Sicher’s message to pilots.
American’s pilots have picketed recently against grueling schedules, something they want to be addressed in a new contract. Pilots at Delta and Southwest have picketed in recent weeks for similar reasons.
Sicher also struck an upbeat tone about contract talks with American, particularly about quality-of-life issues.
“Please understand that no firm commitments have yet been made, but I feel that we have, at least for the first time since negotiations began, received positive indications that management is motivated to achieve collaborative solutions to longstanding problems with our current contract that will greatly enhance our ability to trade our trips and consequently enhance our quality of life,” he wrote.
Trump media company subpoenaed in federal criminal probe of SPAC deal
Former U.S. President Donald Trump gives the keynote address at the Faith & Freedom Coalition during their annual “Road To Majority Policy Conference” at the Gaylord Opryland Resort & Convention Center June 17, 2022 in Nashville, Tennessee.
Seth Herald | Getty Images
Donald Trump’s media company was subpoenaed by a federal grand jury in connection with a criminal probe, according to the company with which the former president’s firm plans to merge.
Digital World Acquisition Corp. said in a filing Friday that Trump Media and Technology Group received a subpoena from the grand jury in Manhattan on Thursday. The Trump company also received a subpoena from the Securities and Exchange Commission regarding a civil probe on Monday, DWAC said.
DWAC also said some current and former TMTG employees have also recently received grand jury subpoenas.
The filing came days after DWAC said the government investigations could delay or even prevent its merger with Trump’s newly formed company, which includes Truth Social, a social media app intended to be an alternative to Twitter.
Neither TMTG nor a spokeswoman for Trump immediately responded to CNBC’s requests for comment.
The Justice Department and the SEC, which regulates the stock market, are investigating the deal between DWAC and Trump Media. By merging with DWAC, which is a kind of shell company called a special purpose acquisition company, or SPAC, Trump’s firm would gain access to potentially billions of dollars on public equities markets.
Trump established Truth Social months after Twitter banned him for his tweets on Jan. 6, 2021, when hundreds of his supporters stormed the U.S. Capitol in a bid to overturn Joe Biden’s victory in the presidential election. Trump Media’s CEO is former Rep. Devin Nunes, one of the former president’s most ardent loyalists in the Republican Party. Trump is also considering whether to run for president in the 2024 election.
Trump has continued to spread the lie that the election was stolen from him. His alleged involvement in the Jan. 6 insurrection is being probed by a House select committee that has accused the former president of being at the center of a multipronged conspiracy to block the peaceful transfer of power to Biden.
Early criticism of the Trump-DWAC deal came from Sen. Elizabeth Warren, D-Mass. In calling for an investigation, she wrote to SEC Chair Gary Gensler in November, telling him that DWAC “may have committed securities violations by holding private and undisclosed discussions about the merger as early as May 2021, while omitting this information in [SEC] filing and other public statements.”
DWAC shares are far off their highs, closing Friday at $24.20. The stock had surged above $90 in October, after the deal with Trump’s group was announced.
DWAC on Monday revealed in a securities filing that it learned June 16 that each member of its board of directors received subpoenas from the same federal grand jury.
The grand jury sought documents similar to those the SEC already requested as part of its civil probe, DWAC said. The company itself was served with a subpoena a week ago with similar requests, along with other requests relating to communications, individuals and information involving Rocket One Capital.
DWAC also revealed Monday that a board member, Bruce J. Garelick, had told management that he would quit the board during the previous week. Garelick said his resignation “was not the result of any disagreement with Digital World’s operations, policies or practices,” according to the company filing.
— CNBC’s Kevin Breuninger and Thomas Franck contributed to this story.
This is breaking news. Please check back for updates.
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