Looking for a used car?
Get ready for some sticker shock. The microchip shortage has slowed production of new vehicles, funneling buyers instead to pre-owned cars, trucks and SUVs, and prices have risen significantly as a result.
The inventory of new vehicles in California is down 75%, according to Jessica Caldwell, Edmunds’ executive director of insights, who recently surveyed dealerships across the state.
That shortage has led to price hikes as dealers are charging a premium for the ones they still have on hand, Kelly Blue Book reports.
In August, the average nationwide price for used vehicles rose 26.2% year-over-year, or $6,454, according to iSeeCars.com. Things were worse in July when the annual price hike averaged nearly 32%, and in June when it hit 32.7%.
The report also breaks out price increases by region, and Los Angeles ranked 33rd with an average annual price increase of $6,124, (up 24.8%) in August. L.A. fared far better than the Fresno-Visalia area, which topped the list with an average hike of $7,524, or nearly 37%.
New York City had the smallest increase of $4,895, or 19.8%.
The 10 vehicles with the biggest increases had price changes ranging from 1.2 to nearly two times the average yearly hike.
“As the microchip shortage-related plant shutdowns continue, and with the aftermath of Hurricane Ida expected to further elevate prices, there appears to be no relief in sight for used car shoppers,” iSeeCars Executive Analyst Karl Brauer said in a statement.
The COVID-19 pandemic prompted the temporary closure of scores of factories. Supplies needed for chip manufacturing were unavailable for months as as result, and the auto industry is still playing catch-up.
The compact Mitsubishi Mirage topped iSeeCar’s list with an average year-over-year price increase of nearly 50% in August. That added $4,457 to the cost of the car, boosting its average used-car price from $8,491 to $13,398.
Others rounding out the top five include: — Nissan LEAF — up $6,370 (46.8%) to $19,990 — Chevrolet Spark — up $4,467 (44.7%) to $14,456 — Mercedes-Benz G-Class — up $45,992 (40.2%) to $160,465 — MINI Hardtop 2 Door — up $6,044 (34.8%) to $23,402 The report also lists used vehicles with the smallest price increases. They include: — Mercedes-Benz GLC — up $2,832 (8%) to $38,123 — Audi SQ5 — up $3,821 (9.1%) to $45,652 — Volvo XC90 — up $3,557 (9.3%) to $41,953 — Lexus IS 300 — up $2,924 (10.1%) to $31,987 — Audi Q5 — up $3,866 (12.7%) to $34,376 New vehicle prices are on a fivemonth incline.
In August, the average price paid for a new car hit $43,355, an increase of nearly 10% from a year before, according to Kelly Blue Book.
In surveys from late August, 48% of new car shoppers said they were likely to postpone their purchases, the automotive research firm said. Of those still looking to buy, 25% said they’d consider switching brands due to the shortage while 19% were willing to consider a different type of vehicle than they were initially seeking.
“With the ongoing inventory challenges that auto manufacturers are facing across the board, coupled with historically low incentive spending, car shoppers end up being the ones paying the price — quite literally,” said Kayla Reynolds, a Cox Automotive analyst.
Ford cut its North American vehicle production in July and August due to shortages. In its second-quarter earnings report, the automaker said supplies were improving, although it lost production of about 700,000 vehicles during the quarter.
Overall sales for September 2021 were off by 17.7% yearover- year, but some models fared much worse. Ford Fusion sales were down 99.5% and Ford Fiesta sales were down 100%.
General Motors said the chip shortage will cut its earnings by $1.5 billion to $2 billion. The company has been idling some of its North American assembly plants due to the shortage.
Year-to-date, U.S. railroads have transported more than 490,870 carloads of motor vehicles and parts. That’s a 5.6% increase from 2020 volumes at the same time, according to weekly rail traffic data compiled by the Association of American Railroads.
On the surface, that would appear to indicate the auto sector has rebounded from the COVID- 19 pandemic. But this year’s gains are amplified by 2020’s abrupt shutdown that halted most auto-related rail shipments during the March-May 2020 period.