Car Buyer's Guide - The best cars to buy in 2021

Published 15 Dec 2020 in Research

Data-driven advice on what cars to buy and the best time to buy them

Photo of compass pointing towards "2020" text

December 10, 2020

Americans shopping for new or used cars in 2020 have navigated a turbulent market. They’ve seen lower interest rates and lower gas prices along with household relocation, manufacturer incentives and lease return deferrals. High demand and low inventories have conspired to make this a particularly tough market for buyers to navigate.

But beyond these headlines, there are important nuances and exceptions. Good buys can be found today on dealer lots for certain vehicle types … and for buyers willing to wait until the first quarter of 2021, buying windows will open up for more vehicle types.

CoPilot offers this breakdown of trends, segment by segment, to help buyers confidently navigate this turbulent car market. In many cases we recommend they wait until inventory levels further rebound in the weeks and months ahead.

What is CoPilot? The CoPilot app is a car buyer’s expert partner, helping them navigate every step of car shopping and buying. Our proprietary “Google for cars” search platform has the deepest level of vehicle and market data available anywhere. Each user’s CoPilot scans more than 46,000 websites several times daily, looking for their perfect car. And CoPilot’s 600 million analytical pricing models provide superior insights on what and when to buy, and at what price.

We are 100% on the buyer’s side. Unlike traditional sites and apps that promote cars from paying dealers, CoPilot accepts no money from dealers.

This report’s data will be updated every Monday. Media inquiries: bradford@copilotsearch.com.

Five Recommendations for Buyers

1. The really good deals won’t be here until Spring 2021 … but the best ones (low mileage 2017-2019 cars) will be worth waiting for.

Near new cars are low-mileage, often lease return vehicles that are well cared for, gently used, and still under manufacturer warranty, giving you the best of new and used.
We’re seeing certain segments of near new come back into pre-pandemic supply levels.
Normally this would indicate an opportunity to buy … but since consumers see those as valid alternatives to impossible-to-get new cars, the opportunity only exists in two segments right now: sedans and compact vehicles.

2. Want a truck or large SUV? Keep your current vehicle and sit this market out until next year.

Trucks are in high demand and manufacturers can’t produce at capacity. This means you’ll likely pay near MSRP for a new truck and might even have to wait to get it.
Even near new (2017-2019) trucks are flying off dealer lots, but with supply finally catching up, those will be good deals in the spring of 2021 if you can wait. Near new trucks give you similar reliability and features for a much better price than new.

3. Never thought about buying a sedan? Maybe you should.

While not a fit for everyone, four-door sedans are worth considering since they have seen lower demand than trucks and SUVs.
Near new sedans or new compact sedans are looking like good opportunities that leave a lot of room for negotiation, since dealers’ lots are getting filled with those.

4. Don’t sell your used car just yet (even if you’re hearing you should).

It’s true that used car prices have appreciated because of higher demand, but selling your used car now also means you’re likely to pay a premium on your new vehicle, negating that advantage.

5. Don’t buy a brand new car if you can wait a bit.

In general, new cars have been in very short supply leading to consumers paying close to MSRP, buying cars on order with long wait times, or choosing low mileage, near new vehicles as substitutes.
New cars are a bad deal right now across the board and we recommend to wait if you can: Manufacturers’ production has been impacted severely by the pandemic, and it’s hard to predict when that will come back as they continue to reopen and shut down in waves.
Manufacturers have also pulled back on incentives, knowing that their low inventory will sell without. On average, that means $800 in incentives are gone vs. pre-pandemic, with some in the thousands.

Insider Information

Nuances Matter

When following the news about cars, we may get the impression that it’s either a buyer’s or a seller’s market. However, there are deals hiding even in a seller’s market if we look at the type of vehicle and the age. So CoPilot has prepared the following segment-by-segment breakdown to highlight what to buy and when.

The best deals are always available to buyers with the most flexibility. As an example, if you can see yourself driving a slightly used, near new large luxury sedan instead of buying an SUV, you may find much better prices right now and get the same utility and reliability.

Understanding “Days Supply”

Days Supply is the most important measure to understand when looking at car market trends. It expresses how many days it would currently take to run out of dealer inventory at the current level of demand.

Days Supply for New Cars

Car dealerships aim to have close to 60 Days Supply on their lots, during which time they don’t have to pay the manufacturer for the car yet … so it costs them nothing other than retail space to sell a car within that time frame.

When Days Supply goes significantly over 60 there’s a glut in supply, a lack of demand, or both. This indicates a buyer’s market.

For trucks, however, dealers like to have more inventory since they come in so many configurations – cab size, bed length, hauling capacity and so on. We would consider ~70 Days Supply to be market equilibrium.

Days Supply for Used Cars

Dealers generally have to buy used cars as part of trade-ins or at auction. That’s why they try to keep them on the lot for shorter periods of time, making around 40 Days Supply the number they generally aim for in a stable market.

When Days Supply for used vehicles goes significantly over 40, dealers have too many used cars on their lots and will discount to get rid of them, creating a buyer’s market.

Market Trends and Predictions

Source: CoPilot Market Data

The new car market was already at a Days Supply low point before the pandemic, driven by the highest amount of manufacturer and dealer incentives since the financial crisis of 2008. It briefly shot up during the initial buyer uncertainty in April and May, and then collapsed under the high demand for vehicles caused by households relocating, ultra-low interest rates, and favorable gas prices.

On the supply side, manufacturers – especially domestically – continue to struggle to keep factories open and operating at capacity as workers get sick or they shut down entirely.

While there’s a slight upward trend here, it’s impossible to predict when public health issues will be fully resolved. But we expect its effects on the auto market will continue into the spring of 2021 at least.

Recommendation: Wait to buy a new car if you can, or consider a nearly new car as an alternative.

Near New: An Emerging Alternative

Near new cars – model years 2017-2019 with low mileage – are becoming a popular alternative to buying new or older used cars.Source: CoPilot Market Data

When the pandemic first hit, manufacturers aggressively delayed lease returns by incentivizing extensions. Those typically gently used, highly optioned, low mileage cars are now coming back into the market for the first time, helping to fill up dealer lots. Many of those are still covered under manufacturer warranty as well, making them just as worry-free as a new car.

Under normal circumstances, this influx of near new supply would lead to lower prices for consumers, but since many new car buyers have no other option, they’re increasingly open to the idea of near new, keeping near new prices at normal levels.

There are some good deals here though that consumers can discover through CoPilot’s Compare tool, a free tool to help them decide between new and near new. But it depends on the segment.

Recommendation: Generally, take a good look at low-mileage 2017-2019 lease returns as an alternative to new. But in this market, not all types of near new vehicles are a great deal. Read on for more.

Recommendations by Vehicle Type

See Appendix (p. 19) for graphs detailing model prices and availability for each type.

Trucks

Looking to buy a truck? So is everyone else.

America’s most popular vehicle type in 2020 once again is the truck. Below, we break down how to get a decent deal on a truck, even with everybody looking for one right now. Hint: You’ll want to wait a little longer.

New Large Trucks (1 or ¾ Ton)

Current Top Seller: Ford F-250, average price of $59,177 and 54 Market Days Supply.

Best Buy: Nissan Titan XD, average price of $54,446 and 110 Market Days Supply.

Source: CoPilot Market Data

New large trucks have been the hardest hit by supply challenges and high demand. While they were readily available before the pandemic with 92 Days Supply, dealer lots continue to empty.

Source: CoPilot Market Data

The change in Days Supply as a percentage shows just how much of a seller’s market it currently is. With only 50% of pre-pandemic Days Supply, dealers are taking orders at or near MSRP, and customers have to wait for production to ramp before those orders get filled.

There is a silver lining though: Near new.

Near New Large Trucks (1 or ¾ Ton)

Current Top Seller: Ford F250, average price of $52,614 and 47 Market Days Supply.

Best Buy: Nissan Titan XD, average price of $38,667 and 48 Market Days Supply.

Source: CoPilot Market Data

As can be seen above, the market is starting to relax for low-mileage 2017-2019 near new large trucks. They are roughly at pre-pandemic levels now. Note though that prices have yet to adjust to higher supply levels.

Recommendation: If you want a truck and can wait, consider buying near new in the spring of 2021. Stay away from new trucks for a while: Manufacturers can’t keep production volumes high enough and we predict that’ll continue well into spring of next year, so you’ll likely pay a premium and might have to wait to take delivery.

Small and Midsize Pickup Trucks (¼ & ½ Ton)

Current Top Seller: Chevrolet Silverado 1500, average price of $45,280 and 49 Market Days Supply.

Best Buy: Nissan Frontier, average price of $31,076 and 95 Market Days Supply.

Source: CoPilot Market Data

If you were hoping to buy a quarter or half-ton new truck this winter, we recommend holding off as well, for the same reasons as with larger trucks: High customer demand and low production numbers are keeping dealer lots empty.

However, the story is a little more nuanced if you consider near new as an alternative to new:

Near New Small and Midsize Trucks (¼ & ½ Ton)

Current Top Seller: Ford F-150, average price of $37,163 and 63 Market Days Supply.

Best Buy: Nissan Frontier, average price of $25,168 and 53 Market Days Supply.

Source: CoPilot Market Data

As far as trucks go, buying a recent 2017-2019, low-mileage lease return is your best bet to get a decent deal right now. While prices usually trail inventory, dealers are keeping more inventory on lots right now, indicating that consumer interest has moved from the smaller to larger trucks.

Recommendation: If you have to buy a truck this winter, consider buying a small or midsize truck as a near new vehicle. Gently used and highly optioned, these 2017-2019 models may soon become good buys as dealers keep more on their lots than they usually do.

Sport Utility Vehicles (SUVs)

Thinking about buying an SUV? Here too, consider near new.

New Full Size SUVs

Current Top Seller: Chevrolet Tahoe, average price of $68,054 and 36 Market Days Supply.

Best Buy: Dodge Durango, average price of $44,531 and 110 Market Days Supply.

Source: CoPilot Market Data

Demand for full size SUVs has been much higher than midsize as lower interest rates and gas prices have reduced the cost of ownership. On the flip side, dealers currently keep less than the usual 60 Days Supply of new full size SUVs on their lots, giving them little incentive to negotiate.

Near New Full Size SUVs

Current Top Seller: Chevrolet Tahoe, average price of $42,874 and 50 Market Days Supply.

Best Buy: Ford Expedition EL, average price of $30,899 and 64 Market Days Supply.

Source: CoPilot Market Data

If you’re in the market for an SUV right now and it needs to be full size, near new is (again) the best alternative. While prices are still lagging behind supply-demand equilibrium, dealers are starting to see these well cared-for lease returns show up on their lots, giving them incentive to sell them at competitive prices rather than sending them to wholesale auction.

New Midsize SUVs

Current Top Seller: Jeep Grand Cherokee, average price of $43,102 and 76 Market Days Supply.

Best Buy: Also Jeep Grand Cherokee.

Bonus Mention: Cadillac XT4 and XT5, which are above average in price in this segment at $44,613 and $52,514, but buyers have higher negotiation leverage with 98 and 94 Days Market Supply, respectively.

Source: CoPilot Market Data

In the market for a midsize SUV? The situation is similar if you want a new one. While still a better position than trying to buy a truck, you’ll most likely be paying close to MSRP as Days Supply remains very close to the ideal 60 days that dealers like to keep.

Near New Midsize SUVs

Current Top Seller: Jeep Grand Cherokee, average price of $29,838 and 52 Market Days Supply.

Best Buy: Nothing noteworthy. Wait if you can.

Source: CoPilot Market Data

Similar to full size, the near new segment for midsize SUVs is starting to recover. More of them are starting to show up on dealers’ lots, giving you more power to negotiate.

Near New Luxury Midsize SUVs

Current Top Seller: Cadillac XT5, average price of $29,339 and 50 Market Days Supply.

Best Buy: Same. A near new XT5 is actually cheaper than an XT4 by over $4000 now.

Source: CoPilot Market Data

An interesting slice of the SUV market to consider is near new luxury SUVs. In this segment you could get a luxury vehicle, fully optioned with premium features, at a price that undercuts most new SUVs. While they have been in somewhat short supply even pre-pandemic, their numbers on dealer lots have increased, giving you an opportunity because the majority of the market is going towards large domestic SUVs.

Recommendation: For those who can compromise on size, midsize SUVs are the way to go as most consumers are buying large SUVs right now. Near new midsize SUVs in particular are going to be better buys than the rest, and if you’ve been searching for a large SUV you could trade size for comfort with a near new midsize luxury SUV.

Sedans

Thinking about a sedan? Maybe you should.

Sedans have lost the popularity contest to trucks and SUVs in recent years, but this makes them an interesting option in an otherwise tough market for buyers. While they may not check all the boxes for some, they’re worth considering.

New Sedans

Current Top Seller: Toyota Camry, average price of $29,017 and 49 Market Days Supply.

Best Buy: Honda Civic, average price of $22,920 and 90 Market Days Supply.

Bargain Bonus: Nissan Versa, lowest average price of $17,342 and 82 Market Days Supply, you can probably get this small sedan for even less

Source: CoPilot Market Data

New sedans have remained on dealer lots in surprising numbers, considering trucks and SUVs have been in short supply. Throughout the pandemic, new sedans have been an alternative for some buyers seeking space and comfort. Currently hovering at around 75 Days Supply, they’re an interesting option if you need to buy right away.

Near New Sedans

Current Top Seller: Honda Civic, average price of $16,336 and 42 Market Days Supply.

Best Buy: Chevrolet Cruze, average price of $14,494 and 60 Market Days Supply.

Source: CoPilot Market Data

In particular, near new sedans are worth considering right now. Demand for them is average, while supply is coming back with well cared-for, gently driven lease returns coming into the market. What’s different here – and makes them a good buy right now – is that new inventory hasn’t been as stressed because many new car buyers aren’t willing to substitute with near new.

New Compact Sedans

Current Top Seller: Toyota Corolla, average price of $22,051 and 70 Market Days Supply.

Best Buy: Most new compact sedans right now. Even Honda Civic and Toyota Corolla, the highest selling cars, are readily available on dealer lots.

Bargain: Kia Rio, which costs just $15,885 and is filling up the dealer lots as consumers want larger cars. Sitting at 92 Market Days Supply, this could be a great bargain for someone looking to buy a new small sedan.

Source: CoPilot Market Data

If you’re looking for a new sedan, however, consider downsizing to a compact. The market is moving towards larger vehicles, driven by low interest rates and low gas prices, putting pressure on compact sedan sales. As can be seen above, that makes these vehicles a particularly attractive alternative for someone who just wants to get around reliably. With 81 Days Supply, dealers’ motivation to get rid of those smaller new sedans is very high, giving buyers more room to negotiate.

Recommendation: Sedans are a decent buy in this market, with most buyers flocking towards trucks and SUVs. If you were considering a sedan – or you’re willing to compromise from an SUV – we predict good deals are coming up soon. Especially on near new lease returns, your leverage with the dealers is going to be high, creating a great opportunity to get premium equipment and solid reliability without the depreciation of a brand new vehicle. But if your heart is set on a new vehicle, consider a compact sedan as now is a good time to buy one.