At least in the USA, due to COVID there has been lower than normal new car inventory at dealerships for the second half of 2020. This drove new car prices up which in turn drove used car prices up.
At the end of 2020 it seemed like the inventory problems for new cars might be coming to a close in early 2021, but if this shortage of semiconductors is real then maybe early 2021 still won't see new and used car prices come back down for a bit longer.
The whole “dealer inventory” thing seems so strange as an outsider. Is it specific to the US? Or North America? In Europe (or at least the European countries I’ve been in) and Japan, you go to the dealer, they will have a few showroom and test cars, and then you sit down, spec your car, haggle the price (this is changing in Europe with third parties who will negotiate for you), and then wait for your car to come out of the factory
From time to time there will be a showroom car on sale that matches, especially if you’re near the end of that generation
In the US (and I assume also Canada) it's almost the exact opposite. Custom order cars are possible, but rare. The vast majority of new cars sold are built with a factory-chosen set of options and sold from dealer inventory. Transferring a car from another nearby dealer if needed is also fairly common, if they had the particular color or option group the buyer wanted but the local dealer didn't.
Which made car shopping quite a hassle for me because I wanted something that isn't very common (non-sport trim with highest spec options and manual gear) but which wouldn't have been any problem at all for the manufacturer (since they list those options on their site for those models).
But why do you think the system is setup this way? Car dealerships in the US having more money (or financing access) to keep stocks than other parts of the world? US customers wanting instant gratification for their purchase? (although, likely, anyone likes that over delayed car delivery, it's just that once you get used to instant car delivery is hard walk away from it)
Did you actually try to order what you wanted? I've been ordering my cars from the dealer almost exclusively for the past 25 years. Never had a problem. Sure, they'd rather sell a car off the lot, but I've never had one tell me they wouldn't order the car for me.
I did get rejected by Audi when I wanted to order a car in a special paint color. They advertised "any color you want, just $2500 extra". When I tried to take them up on it, the reply was, "We don't know you, your dealer isn't a top performer, and our custom paint shop is booked up over a year anyway. So kindly bugger off."
I suspect you’re paying a large premium. The last car I bought included a $10K discount off MSRP or a smaller discount with 0% financing, but only for in-stock inventory. That was before haggling, as those were pass-through dealer incentives.
Presumably, no one pays anywhere near MSRP for that model unless they custom order from the factory.
I’m sure it varies from manufacturer to manufacturer, but still.
Spitballing here: more land in the US means lower cost to stock cars in dealerships. Also makes it easier to do an impulse purchase with all the easy financing available, compared to the European scenario of waiting for delivery (and possibly changing one's mind).
Car dealerships often sit on prime retail locations. So that vast inventory will often sit in a location close to but not conveniently adjacent to the actual dealer.
"From an automotive standpoint, dealership inventory remains lean – currently sitting at a nine-year low and down 22% for year-ago levels – which has already led to some reversal in the very generous summer incentives", which indicates higher prices. I couldn't find pricing data.
This new shortage + current shortages + low interest rates = high prices on used/new. I was thinking of buying something last year, but now I think I'll wait until '22 or '23. (or if I can WFH, never!)
Yeah, I was also hoping to buy a vehicle in 2020 but ended up holding off due to not driving nearly as much now and due to the prices going up. I was hoping prices would come back down in 2021 but we shall see...
I'm complete confused about the economy in the United States. You look at the news and all you hear about is the enormous amount of financial pain families are going through at this time. But then you hear about cars and trucks flying off of dealership lots.
I guess I'll be holding onto my 2011 Honda Odyssey until it catches fire on the road.
The average income (including stimulus checks) in the US went up, while at the same time lots of people losing their jobs. People who didn't lose their jobs (or have their hours curtailed), are doing significantly better because they aren't spending as much money and got stimulus checks.
Meanwhile those who did lose their jobs are screwed. These people were probably also poorer before COVID hit, so fewer of them would have bought a new car absent COVID anyways.
This is also why the stock market can't seem to crash; bond yields are super low, and there is more money being saved (and thus looking for investments) than ever.
That's been the problem in the US for the past 45 years or so. We have a lot of wealth, it's just not particularly evenly distributed. Every single financial shock in my lifetime has made the problem worse.
I've heard its a K-shaped recovery. Some parts recovered quickly but others didn't. For example service and tourism didn't. But tech and construction is less impacted.
Used car pricing went sideways after the cash for clunkers program, and the market still hasn't re-normalized, at least here in California. I'm surprised at how long the effects are lasting.
Sorry, but this is bullshit pedaled by people who've never given an ounce of thought to the economics of car buying.
C4C effected 700k cars from the 90s, all of which were worth less than $3,000. There were, at the time, roughly 250 million registered vehicles on the road. There's absolutely no chance that this had any effect what-so-ever on the market for used cars. 700k is literally a rounding error when compared to 250 million.
What hurt the used car market was the fact that new car sales fell from roughly 15 million a year in 2008, to 9 million a year a year in 2009. It took until 2015 before cars sales reached that of 2008.
All told 40 million fewer cars were produced between 2009 and 2015 compared with how many would have been produced if not for the GFC.
Those 40 million cars that were never produced are what caused used car prices to spike. Not the 700k Ford Windstars and Explorers lost to C4C. Anyone who tells you different is a fool.
At the end of 2020 it seemed like the inventory problems for new cars might be coming to a close in early 2021, but if this shortage of semiconductors is real then maybe early 2021 still won't see new and used car prices come back down for a bit longer.