![]() Due to this and the ongoing recovery from the inventory shortage, experts predict that vehicle prices won’t completely normalize until at least October 2023. However, with the inventory shortage starting to recover now, is now the best time to buy a car or not? Should You Buy a Car Now?Ĭurrently, interest rates in the economy have increased, and the costs of goods overall have gone up. Clearly, customers don’t want to pay a premium cost that dealer lots are offering, especially with MSRP values eclipsing what they were a couple of years ago.ĭespite this higher demand for new and used vehicles, many consumers have opted to wait until sticker prices normalize from their record highs. As a result, car sales have fallen to historic lows.ĭuring the second quarter of 2022, car sales were nearly a million fewer than in the same period last year alone. This premium price point also trickles down to used car prices, resulting in all-time highs for both new and used vehicles. High prices for new vehicles aren’t where the effects stop. From an economic standpoint, the law of supply and demand demonstrates that higher demand and lower supply drive prices up due to a scarcity of goods. This has caused the demand for vehicles to be higher than the supply available. While this occurring in one specific area wouldn’t result in major issues, it happened everywhere across the country at once. ![]() Now, as the pandemic has begun to wane down, car shoppers have begun visiting dealerships again. This then led to lower inventory levels for new vehicles, which, in turn, led car shoppers to gravitate towards available used cars until those, too, began experiencing a shortage. How Does The Shortage Affect Car Sales?Īs mentioned, vehicles cannot be manufactured without semiconductor chips, resulting in disruptions in the manufacturing process. While the problem is being addressed by auto manufacturers and the number of vehicles coming off of the assembly line is returning to, and even surpassing, pre-pandemic levels, the inventory shortage is still visible. Still, this discrepancy between supply and demand has resulted in a low inventory of many vehicles. Major car brands such as Ford, Toyota, Kia, and more started placing additional orders for semiconductors. Without the semiconductors, carmakers couldn’t completely manufacture their vehicles, resulting in few than-expected new models arriving at dealerships.Īs the pandemic settled, demand for vehicles began to rise faster than the supply of semiconductors on hand. Greater demand for work-from-home technology such as computers, laptops, and tablets, which also use semiconductors, and decreased demand for automobiles due to lockdowns, resulted in a shift. However, at the pandemic’s start, automakers faced higher levels of competition for semiconductor orders. Safety features, power management, displays, and more are all examples of things these chips help power. Within vehicles are semiconductor “chips” that allow many functions in a vehicle to work properly. More specifically, a microchip shortage during the pandemic is causing today’s inventory shortage. ![]() The inventory shortage is an indirect result of the COVID-19 pandemic. ![]() Understanding whether or not now is the right time to be looking into car buying requires knowledge of what caused the car shortage in the first place. Luckily, just as the rest of the world has begun opening back, the inventory shortage has improved in recent months, and many prospective car buyers are wondering if now is the best time to enter the car market. A car inventory shortage left car shoppers with higher-than-ever car prices for both used and new car purchases. Even bustling industries came to a screeching halt during the pandemic, and the auto industry was no exception. The pandemic affected everyone in the last couple of years, from weeks-long quarantines to working from home and beyond. ![]()
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