According to the McKinsey Global COVID-19 Auto & Mobility Consumer Survey from June 1 to 4, 2021, the intent of consumers worldwide to purchase cars has reached 94 percent of pre-pandemic levels. It is also seven percent higher than that in September 2020.
There is a huge problem in the U.S., though. There are not enough cars available for sale and the few that are there have become too expensive. A woman told CBS News that the price of a new Honda sports utility vehicle (SUV) was more than what she had paid for her house. She did not purchase the vehicle. Prices of used cars are not far behind, as well, and they are just as scarce.
Car owners whose vehicles are in good running condition are advised to hold on to them. If you simply want a fresh look, get a professional paint job. If the paint is still in pristine condition, preserve it. A car detailing service company can protect the vehicle’s paint with a ceramic coating or paint protection film. These will also prevent the deterioration of the car’s body from rust.
Causes of Low New Vehicle Supply
Yahoo Finance and CBS News explain that the shortage in auto production began early in the pandemic. Manufacturers locked down for two months to protect workers. Computer chips used in car manufacturing were rerouted to manufacturers of gaming consoles, tablets, and laptops which were in high demand. When auto manufacturing restarted, the supply of automotive chips was not able to immediately catch up. These are produced in Asian countries that were also hit hard by Covid 19.
Just as the shortage was easing up, the emergence of the Covid 19 Delta variant affected production in the same countries once more. Data from AP News shows that there are also shortages in other auto manufacturing materials such as glass, plastics, and wiring harnesses.
In August, Toyota stated that it would cut production in North America and Japan by 40 percent for two months. In early September, Ford and General Motors stated that there would be closures of one to two weeks at several of their factories in North America. Collectively, this will result in 360,000 less vehicles being made this month. Furthermore, Kia closed its plant in Georgia from September 7 to 8, and the Nissan factory in Tennessee was closed from mid-August up to September 13.
On August 29, Hurricane Ida hit Louisiana and further exacerbated the problem in car supply as it destroyed more than 250,000 cars, according to estimates. This included new and used cars for sale.
According to analysts, even if manufacturers are able to ramp up production to a hundred percent of their highest capacity, they will need a year to catch up to normal supply levels. This means that it will also take more than a year before auto prices normalize.
Data from Kelly Blue Book shows that from April to July this year, prices of new cars hit new records every month. Selling prices were above the suggested retail prices of manufacturers, and eight percent higher than the same time in the previous year. In August, the Consumer Price Index (CPI) showed that new car prices increased by 1.2 percent from the previous month.
Low Used Car Supply
Used car prices have soared to 32 percent more than prices in 2020. This is because people who cannot find or afford new cars turn to used car dealers. Again, the problem is that there are not enough used cars available.
Usually, car rental companies are primary sources for used cars. They lease out new cars and then sell these later as used cars. However, early in the pandemic, car rental companies already sold off about one-third of their vehicles.
CarFax also told CNN Business that consumers who are about to buy used cars must be cautious. It warns that there are about 370,000 cars in use today throughout the country that had been damaged by storms and hurricanes. These could be sold to buyers without that information. CarFax states that when silt or mud gets inside a car and in its connections, the car will start to deteriorate from the inside. It is, therefore, best to hire a professional mechanic to look over a used car before buying it.
Protect Your Vehicle
If you have a current vehicle that is running well, it is advisable to keep and protect it with regular preventive maintenance. Use an auto maintenance app that will remind you when you need to get certain jobs done.
If you have not been using your car during the pandemic, continue to clean it regularly. Do a short drive around the neighborhood every now and then to ensure that rust does not form on brake disks. Also, before starting the car, check under the hood for any infestation of rodents.