Are you planning to purchase a vehicle this year? If you are, you may have to get in line. Due to recent “strong demand and tight inventory”, the car-buying experience has dramatically changed across the nation.
“The typical dealership experience that consumers are familiar with – walking dealer lots with rows and rows of cars, negotiating over price and getting many incentives – is not likely to return this year because there are 4.5 [million] to 5 million consumers on the sidelines waiting for cars,” head of data and analytics for J.D. Power, Tyson Jominy, told CNBC in January.
Jominy said that, as a result, inventory is expected to remain low and prices high for the remainder of 2022.
Local Inventory
Here in Corvallis, inventory rating is based on what you are looking for. Wilson Motors, for example, had 74 used vehicles for sale as of early April. However, the majority of those included Dodge Grand Caravans, Ford trucks, Ford sedans, and Jeep Wranglers. Additionally, the dealership had 26 new vehicles, but even a more limited selection. Six were Jeep Gladiators, seven were other Jeep models, and nine were Dodge Rams.
University Honda had an even more limited inventory. They had 11 new vehicles which were all Hondas, and 23 used which consisted mostly of Hondas and Dodge Rams.
One popular vehicle that seems to be missing in action is the Toyota 4Runner. Even Toyota of Corvallis only had one new model listed, and the sticker price was over $49,000. Plus, it had also already been spoken for, according to a Toyota salesperson. In order to snag a new 4Runner, you most likely will need to be on a waitlist. As for pre-owned models, they only had one of those as well – a 2019 for $40,000.
That being said, if you are in the market for a Jeep, Honda, or pickup truck, you may be in decent luck. Otherwise, you may need to venture down to Eugene or up to Portland in order to find what you are looking for.
A Micro-Sized Culprit
The main cause of this vehicle shortage is linked to the widespread microchip shortage that began back in 2020. Microchips are imperative for modern cars to operate. Today’s new vehicles can have as many as 100 microchips controlling GPS navigation, climate control, and more. Luxury vehicles can have as many as 150.
At the start of the pandemic when the world was essentially put on pause, automakers began ordering fewer microchips in anticipation of slower business. Simultaneously, people were purchasing more computers, smart phones, and other electronics that contain microchips with the burgeoning “stay at home” culture.
With vaccines and lessening restrictions, people decided it was time to start car shopping again. Unfortunately, the microchip industry was not prepared for this kind of demand. Now, without enough microchips, the production of new vehicles has significantly slowed while the demand continues to rise.
“It’s clear the only solution to solve this crisis in the long-term is to rebuild our domestic manufacturing capabilities,” Secretary of Commerce, Gina Raimondo, told Kelley Blue Book.
New and used vehicle price increases
In December of 2021, car-seeking Americans gasped as Kelley Blue Book announced the updated new vehicle price average of just over $47,000.
Just one year prior, that average had barely crossed the $40,000 mark. In 2019, it was in the upper-mid $30,000s.
“Today’s environment is especially unprecedented for the modern auto industry; we have not been in a situation before where demand truly outstrips supply of new vehicles,” Stephanie Brinley, analyst at IHS Market, told Car and Driver. “This has created a new pricing dynamic that ultimately results in reported average transaction prices increasing.”
That hefty price tag may also come with a wait list. According to J.D. Power, 57% of new vehicles were sold within 10 days of dealership arrival in December. Oftentimes, the vehicle you are searching for will have already sold by the time you make it into the dealership. Therefore, you have to wait your turn – which could take months.
Since new vehicle prices are through the roof, you may be saying, “I’ll just buy used.”
However, buying a vehicle that is a few years old may not even save you that much these days. The average three-year-old vehicle is now going for $30,334, and the average nine-year old vehicle is going for $14,124. This makes the overall average $29,011 – an increase of 27.9% from 2021.
Fortunately, there is one upside. The heightened used car market has also created an increase in trade-in value. Edmund’s has a calculator to help you determine the value of your current car.
By Rebekah Harcrow
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