Expect High Prices for Used Cars to Continue
News of a drop in COVID-19 cases, increased vaccinations, additional stimulus money in the hands of consumers are expected to boost the economy. According to Edmunds.com, automakers sold more than 3.9 million vehicles during January to March, causing U.S. auto sales to rise more than 11 percent in the first quarter of 2021. Several major companies reported March sales nearly doubled from the same month a year earlier. While this is good news for the industry, it may not be for consumers due to a wrinkle in the industry which analysts foresee will affect the price of used cars.
Apparently, there is a shortage of computer chips and this is forcing automakers to cut or delay production of new vehicles. The lack of a wide selection could make consumers delay new car purchases and prompt them to look at near-used vehicles as an alternative.
During the pandemic last year, many consumers rushed to buy a used car rather than risk getting sick by coming in contact with others by taking public transportation. The higher demand for used cars has drained supply in this market and caused the price of used cars to increase to an all-time high. If new car buyers look to used cars instead, this will further increase demand and drive the price of used cars even higher.
Plant shutdowns during the pandemic caused a disruption in the supply of new vehicles. While many plants have opened, they are not producing in full capacity due to disruptions in the supply chain of many parts. The shortage of computer chips will only make matters worse. Increased technology in new vehicles has only increased the demand for more chips which are used in everything, from a new car’s infotainment system to its advanced safety systems.
Automakers also will have to compete with other companies for these chips, which are also used in laptops, gaming equipment, cell phones, televisions and a host of other electronic equipment. Large companies like Apple and Samsung have been forced to delay the production of some of their products already due to the chip shortage. Industry analysts say the chip shortage is likely to continue until at least the third quarter of this year.
With that said, used car buyers should not get disheartened. Interest rates are still low. Don’t let this stop you from searching for a good and reliable used car. See if you can work with your local dealer for a good deal.
When in the market for a used car, stop by Carousel Preowned. CarouselPreowned serving Iowa City, Cedar Rapids, Davenport, North Liberty, Marion, and Coralville, IA, is proud to be an automotive leader in our community. We do our best to ensure your complete satisfaction every time you step into our car dealership. This is why we offer the widest selection of used and pre-owned cars, trucks, and SUVs and provide true ease of purchase in Iowa.