If you’ve driven past any new or used car dealerships lately, you might notice something doesn’t look quite right. Every lot seems to be suffering from a car inventory shortage, so what’s going on? As co-owner of Jones and Sons Auto Sales, I can personally vouch for trouble getting cars in stock right now. Here are some insights I’ve walked away with.
We posted about many Coronavirus interruptions, whether it caused chip plants to shut down or car factories to halt production. This pandemic is surely where the problems began. During this time, we also started noticing trouble with the supply chain, even after facilities opened back up. It seems that production never fully recovered.
With the shortage going on, car prices went way up. There were fewer cars to choose from, so consumers were paying far more than sticker price to get them. Even pre-owned vehicles went up nearly 40% due to the inventory shortage.
Supply vs. Demand
Even with the increased pricing, supply can’t keep up with the demand. It’s unclear how long we will wait until something changes. There continues to be issues keeping workers and getting supplies needed to build new cars. With the lack of new cars, pre-owned vehicles also continue to be priced higher than what most people are comfortable paying. Where does it all end?
Car Inventory Shortage: Is There an End in Sight?
It’s hard to remain positive when looking at the big picture. Unless something major changes, the auto industry isn’t poised to turn around any time soon. If anything, it might only get worse as time goes on. We project that many dealerships will go out of business in the process. For now, many of them are relying upon the service department to keep an income flowing through, but is only going to last for so long.
What are your thoughts? Are you discouraged by what you see?