New and used car prices soar during pandemic – FOX13 News Memphis

New and used car prices soar during pandemic – FOX13 News Memphis

MEMPHIS, Tenn. – After housing, your car may be your biggest expense, and right now it is much more expensive than it once was. The average price of a used car is nearly $30,000, the highest on record.

Our journey to uncover the pandemic’s impact on the car sales industry led FOX13’s Dakarai Turner to Brookland, located just outside Jonesboro, Arkansas, where Wesley Abernathy owns Instant Autos.

“Prices have skyrocketed,” he said, strolling through his fleet of cars with half the inventory than before, a direct result of the pandemic, he said. His point was made clear as he drove past the Chevrolet Tahoe.

“Before the pandemic we had 10, and now you can see we’re down to three,” he said.

He showed us a Dodge Charger that he says has been causing supply chain issues for two weeks, unable to sell because a windshield can’t be delivered.

“You look at it like, ‘Hey, it’s just money just sitting there,'” Abernathy said.

He said the price he pays for vehicles has almost doubled.

“Before the pandemic, our average cost of a car was $9,200 to $9,300, and now it’s over $18,000,” Abernathy said.

In the 22 months since the pandemic began, prices for new and used vehicles have skyrocketed, according to a FOX13 analysis of data collected in discussions with trade experts.

Figures obtained from automotive industry insider Edmunds from the start of the pandemic, from April 2020 to January 2022, the average transaction price of a new car rose from just over $39,000 to almost $46,000, an increase of nearly 15% .

The change is fueled by what industry experts call a shortage of microchips, semiconductors that control the electronics inside a vehicle. According to Ivan Drury, senior knowledge manager at Edmunds, the shortage of semiconductors has ultimately created a shortage of new cars.

“We have demand, not just from regular people looking to buy used cars: we have new car buyers who can’t find a new car switching to a used car,” said Drury.

This, in turn, created greater demand for used cars and drove up those prices.

Additional figures from Edmunds show that between April 2020 and January 2020, used car prices rose from just over $21,000 to $29,500.

The prices represented an increase in inventory costs. Abernathy said he tried not to pass them on to customers, which left him with declining profits for the company.

“We have to absorb some of that cost, which kills any, any kind of progress or growth that we would have had,” Abernathy said.

“We had to be really creative about the planning, about the benefits. Often we will schedule them to be only part-time because we just can’t afford for everyone to get the benefits like before the pandemic,” he said.

Abernathy said he didn’t have to lay off any employees.

“They’re not getting the hours they need, and they may have to work a different day than they were supposed to work,” he said.

“You hate doing something like this when you know a lot of my colleagues have families and kids and they depend on their income, and you know if you ever cut them off it’s a big deal for them . We simply have no choice.

Used car prices, according to Edmunds, are 30% higher now than their pre-pandemic prices.

“The ones who struggle the most are buyers on a very limited budget, people who want to buy a car for maybe $5,000 or $10,000, cars that traditionally have higher mileage, older vehicles and the price of which is exorbitant,” said Matt Deegan, an editor at Kelley’s Blue Book.

The two industry insiders said the same thing when asked about a possible end date for the price hike, saying it’s hard to predict with so many variables in play. -be later this year.

“It’s like every time we feel like we’re building momentum to move forward, we take two steps back,” Abernathy said.

Abernathy said he’s seen friends in the auto industry shut down lots or find other work because of rising prices and falling profits.

“I haven’t come to that, but if I was a bit older and didn’t have a good crew here I would consider it because you can’t build momentum,” he said. he declares.

Consumer Advisor Clark Howard said that if you want a good price, you’ll have to wait until late this year, or early next year, when dealers should have more inventory.

Howard advises you to keep driving the car you have, even if you have to make an expensive repair, because it’s worth it.