Everything has, seemingly, been a little off over the last year and the market for buying/selling cars has been no exception. Consumers have been seeing rising prices steadily for the last few months on both new and used cars. In fact, according to JD Power, it is estimated that new car prices have risen 12% since last summer with limited rebates and cash back offered, while used cars prices have similarly risen up to 40% higher than the average price last summer.
With prices rising among new and used cars, consumers are wondering what is leading to all of this? We wanted a clearer picture, so we sat down and talked with our Vice President/Chief Lending Officer, Tracy Morgan, to get his thoughts on what has been going on within the auto industry.
Q: Why are car prices higher than normal?
A: The demand on new cars outweighing the supply available has caused a trickle-down effect that has greatly affected the new & used car prices. There has been a growing shortage in computer chips for new makes and models of cars that has been tied to production limitations during the pandemic. Without the computer chips, car manufacturers are having a tough time meeting the demands of the consumer. All of this is resulting in less trade in’s effecting the supply and demand for used cars.
Q: Why is the demand so high?
A: There are many factors that could be influencing the increase in demand. But one of the major points is that many consumers put off buying new cars prior to and during the pandemic, due to decreased commutes and financial uncertainty. However, now that life has begun to return to normal everyone is looking to buy simultaneously while the supply is lower than normal.
Q: Any advice for someone looking to buy a new car?
A: Exercise patience and do your research! Make sure to check the NADA book value of any used car you are interested in and do plenty of research on the history of the car. If you have any additional questions about the process or are looking for some assistance, please don’t hesitate to come speak with one of our CES lenders. We will work with you and do our best to get you an affordable loan on a new car!
A loan at CES Credit Union can go a long way to helping you get that new car or new to you used car at a reasonable price! Reach out to the CES Credit Union nearest you and speak with one of our experienced lenders! You can also learn more about the auto loans process at the following URL on our website, https://bit.ly/3rGWCwg.