If you’ve recently visited your friendly neighborhood auto dealership lately, perhaps looking for an end of year sale, you have probably been stricken with sudden sticker-shock after reading the price tag of that brand new vehicle.
According to the latest Consumer Price Index, the price of a new vehicle climbed 11.1% within the last 6 months, and there’s no relief in sight. The culprit is a combination of spiraling inflation and inventory shortages at the dealership, due in part to the lack of availability of Chinese semiconductors.
“We have to charge more money for the cars because we’re paying more money for the cars,” John Bodmann, a product specialist with McGrath Volvo Cars in Fort Myers, told Fox News. “The prices of used cars have escalated since the availability of new cars is limited.”
According to CarMax data, as inflation reaches a 39-year high, used car prices are soaring as high as 50% above last years prices. The increase can be attributed to the prices dealers pay for the vehicles at mass auctions. Some models are so expensive, they may cost more than their brand new counterparts.
As prices for used vehicles blow past any seemingly rational level, it is the kind of scenario playing out at many auto dealerships across the country. Prices have soared so high, so fast, that buyers are being increasingly priced out of the market. https://t.co/WpNjebwSUd— News4JAX (@wjxt4) January 3, 2022
According to the data, used car prices for the top selling carmakers have soared. Ford, which sold the most vehicles in 2020, has seen its used car price increase 45.4% in 2021. Toyota, the second highest-selling carmaker, saw its price increase 30.5%. However, Chevrolet saw the highest price increase at 50.5% (from $22,000 to $33,000).
The car dealers told Fox News they estimated that prices would continue to be high for the next one to two years.
“Customers come and see less now and have to pay a bit more,” Diamond Cut Autos sales consultant, Alexis Alvarez, told Fox News. “For example, now you get a car that’s 2010, and it might just cost you like four or five grand more.”
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“Everything is more expensive,” Daylin Auto Sales employee, Diana Torres, told Fox News. “Before, you’d be able to find a 2007 Toyota Camry, for example, only $3,000. Now they’re all running like $6,000.”
The other issue that’s driving prices higher is the worldwide shortage of Chinese-made semiconductor chips, manufactured exclusively within the communist regime.
Although there are plenty of customers who want to buy new vehicles at hefty prices, there still aren’t enough computer chips available for the industry. So supplies are short, prices are high, and many customers can’t get what they want. https://t.co/VAJRsv0zzg— Chicago Tribune (@chicagotribune) January 4, 2022
“We get chips made in China for new cars, and they haven’t been getting made. Therefore, all the new cars aren’t coming, bringing up the price on the old cars,” Alvarez told Fox News.
Bodmann similarly said, “The problem behind it is unavailability of new cars because of the chips. We normally would have 125 new vehicles on a lot. We have about 50, which is more than most car dealers have at this particular time.”
Alvarez pointed to how bare car lots look.
“If you go around to new car lots, you’ll see that there’s a lot less cars on their lots,” he said. “I have a buddy at Lexus, there’s like no cars there anymore.”
According to a report from online marketplace iseecars.com, even cheap, new cars like the Chevrolet Spark and the Mitsubishi Mirage have seen a rise of over 50% compared to last year. For example, the Chevrolet Spark was $15,672, which was 50.7% more than the previous year. The Mirage was going for $14,404, which represents a 52.3% increase.