Looking to buy a new car? It’s not as easy as it used to be.
Right now, cars are in short supply and that’s driving prices up.
Gail Blackburn’s been looking for a new car since December.
“I was kind of specific about what I wanted and I looked around on the regular Volvo site and saw the cars were unavailable so I thought I’d wait around a bit,” Blackburn said.
The wait paid off. Because of the car shortage, Blackburn’s used car went up in value.
“I was offered $1,000 more for my used car, which is good,” Blackburn said.
So why is there a car shortage?
Dealers blame the shortage on microchips which need to be used to run new car electronics.
“When we have 600 to 700 new units on inventory that’s kind of common par level for us where now we have 122 cars in stock with only 98 coming in throughout the month,” said Jay Ganzi, managing partner of Cape Coral Chrysler Dodge Jeep Ram.
Blackburn got her new car and the dealer got her old one.
J.D. Power says used car prices are up 17% since the beginning of the year.
“I’ve been in the car business 30 something years and I’ve never seen the value of trade-ins to be what they are now,” Ganzi said.
Both higher-end cars and much less expensive cars are holding their value.
For example, a 2020 Mercedes was worth $133,000 brand new. Now, a year later and 10,000 miles later, it’s worth $168,000.
“Now there’s this pent-up demand,” said Shelton Weeks, chair of the Department of Economics and Finance at FGCU. “Everybody wants to buy it once it’s going to have an effect in the short run but that will work itself out.”
Weeks said prices will stabilize and inventory will get back to normal by the end of the year.
The Alliance for Auto Innovation, the trade group that represents automakers, said the shortage could result in 1.28 million fewer cars being made in the U.S. this year.