Car prices will increase in 2022 and the next few years
At the New York International Auto Show, auto company executives painted a bleak picture of the restrictions that will continue to affect the stock availability of both new and used cars. used throughout 2022.
This is expected to persist for a long time because the car supply is dwindling, while consumer demand is growing strongly and factory output is shrinking.
Chip shortages and other supply chain problems plaguing manufacturers from 2021 have improved this year, however, consumer demand has led to car inventories. is at a historic low.
Mr. Steve Center, Kia’s US sales manager, said: “It could take years before dealer inventories recover. There will certainly be no incentives left.”
Going into 2022, automakers are optimistic that chip shortages will gradually ease but will still cause some constraints on vehicle production globally. Along with other disruptions such as the Russia – Ukraine geopolitical crisis or China’s maintenance of the zero Covid policy. In the past year, the price of autos has skyrocketed, indicating that inflationary pressures have increased for consumers in the US. In March of this year, US inflation rose to a four-decade record, to 8.5% due to soaring food and energy costs, limited supply and surging consumer demand. according to the US Department of Labor.
After rising to a record high, the amount of money Americans spend on new vehicle purchases has shown signs of slowing down in recent months, according to JD Power, a data analytics and intelligence firm. US consumption. In March, the average trading price dropped slightly to around $43,700. However, this level is still about 26% higher than before the pandemic when the average transaction price was only 34,600 USD at the end of 2019.
Currently, leaders as well as auto dealers say that the demand for new cars is still very large, despite rising interest rates as well as continuously high gasoline prices. Because many people are looking for new cars, companies also expect to be able to sell all models they produce until at least 2022. Michael Colleran, Nissan’s head of sales and marketing Motor Co, said consumer demand is still very large.
About 1.2 million new vehicles were in dealerships or on their way to stores at the end of March – half of what they were a year earlier and about a third more, according to research firm Wards Intelligency. with the time before the pandemic broke out. The lack of alternatives has driven up demand for cars and often has to wait weeks or months for delivery. Meanwhile, cars without owners’ names sell quickly because many salespeople keep their own lists of buyers.
Most of the cars at his 10 dealerships in Utah, Arizona and Nevada have been delivered by order, said Hemmersmeier, a car dealership owner. He said customer demand will continue, at least for a few months, although he also has concerns that rising interest rates or a drop in used car prices will weaken sales. .
The company has raised prices recently in response to inflationary pressures, said Peiter Nota, head of global sales at BMW. However, this, so far, has not disappointed buyers, even customers are gradually accepting it. He also said that the demand to buy cars has not shown any signs of cooling down.
The BMW executive also said the prolonged scarcity meant that consumers would continue to face charges that exceed the manufacturer’s suggested retail price.
Dealers are benefiting greatly from this situation. According to JDPower, the average dealer profit for a new car, including financing and insurance related to the sale of the vehicle, was about $5,000 in the first quarter of 2022, more than double that of the previous year. same period last year
This is a tough time to buy a car, but it’s a great time to be in the car business, said Bob Carter, Toyota sales manager.
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