Each year automakers introduce their brand new vehicles. Every time they launch new models and concepts, the public is excited. Sadly, we live in a time of crisis and the auto business has been adversely affected by this pandemic. In reality, brand-new vehicle sales have plummeted. Learn more?
People are still buying cars but they don’t want brand new vehicles. The sales of used vehicles start to increase. Prices of used cars increased 30 percent within a year.
Increased Prices
Second-hand vehicles have risen by almost 30 per cent in the last 12 months. This market has a glut of cars, vans, trucks, and even electrical vehicles.
In recent times, the sales of new vehicles has exceeded those for used cars. In 2019, around 17 million new vehicles only were sold, while used car sales accounted for about 40 millions units.
Fuel prices have been rising sharply, and so has the price of brand-new vehicles. Both increased by 7 per cent. The pandemic was a key factor for the rise in car prices. This also has a ripple impact on the automotive sector.
The pandemic was also devastating to the rental car industry. Companies were forced to dispose of some vehicles in order to recover lost revenue due to the travel restrictions. Luckily, the government began vaccinating people after it was announced. There is an increase in travel, but car rental agencies are still experiencing a problem with vehicle shortage. There aren’t enough vehicles for everyone, and the rental agencies try to move around their existing stock of cars to where travelers need them.
Chip shortage
Semiconductor chips can be used in both the automotive and consumer electronics industries. The demand for electronic products like computers, smartphones, video gaming consoles, appliances, etc. has skyrocketed. In order to limit the movement of people on public streets, governments have set up homeschooling or work from home. As a result of these changes, demand for electronic products has increased.
The auto sector was hit the hardest by the shortage. The microchips used in cars are vital to the management of the engine, driver assistance and computer. The automotive industry is struggling to secure more supply. They were not only in competition with one another for microchips, but also had to contend with players in other industries.
In the third, and fourth quarters 2020, the semiconductor chip demand grew more rapidly than microchip producers could produce. In the third and fourth quarters of 2020, demand for semiconductor chips grew faster than microchip manufacturers could produce.
Ford and Volkswagen are among the automakers that have been forced to reduce production, shut down factories and layoff their workers. Some worry the disruption could continue into 2022.
As the production of brand-new cars is delayed, people seek out other alternatives. The difficulty of obtaining sufficient microchips led to a greater demand for second-hand vehicles. The decreased production of brand-new cars drove the price of secondhand vehicles up to record levels.
Limited supply of pickup trucks
According to some industry professionals, the shortage did start before the global shortage of chip. Many consumers plan to buy new trucks before COVID-19 becomes an outbreak in first quarter 2020.
The only vehicle type affected was pickup trucks. Sales for pickups were unprecedented. The dealers were surprised by the sudden influx of buyers and they had no choice but to liquidate their stock. In May 2020, pickup truck inventories were almost completely depleted by different automakers.
It took a while for the auto industry to recover from its recent setback. Even worse, the microchip crisis was followed by another supply shock for trucks. They cannot replace both the decreasing inventory as well as the new pickup truck orders.
New cars drop, used cars rise
According to Consumer Price Index data, the price of used vehicles jumped by 21 percent to April 2020. In April of 2021, used car prices have risen by 10 percent. The used car market continues to grow despite the fact that there is no steady supply of new cars from dealers.
The new and used car markets are both interconnected. The market supply was greatly affected by the sales decline of the new vehicle market. Few people are regularly trading in their vehicle or ending their auto leasing.
The used vehicle market relies upon the vehicles they buy from customers. This includes people trading in old cars and those who have leased a car. They also rely heavily on the inventories of the car dealers.
Sales of used electric vehicles are slowing down despite the increase in price. Tesla has the lowest annual price increase, with just 6 percent. Electric vehicles provide an alternative to gasoline-powered vehicles for those who do not want to continue driving them. An increase in sales is due to a shift in consumer taste. Sales have risen month-overmonth. The price increase of EVs in 2021 will reach 5.1 % in May, up from 1.1 % in March.
Selling secondhand car
The secondhand market is not the same as it used to be before the pandemic. The price today is much higher than calculated by iSeeCars – a website that searches for and analyzes automotive information.
Dealers call people who have recently purchased cars and want to purchase them. If you purchased a car that you do not love, it might be worth selling right away. If you decide to sell your car before the virus, its value will not be high. In fact, used vehicle prices are up by nearly 30% compared to last time.
The time is right to cash in on a car you don’t use. Even if a vehicle sits in a garage, it’s value is depreciating every day. Coupes convertibles pickup trucks and other vehicles are most in demand today.
If you would like to sell a vehicle at a decent price, then make sure the parts in it are in good conditions. With a pickup truck you can replace old tires, wheels, and install a cover. Nitto tires have different tire series to choose from, including Trail Grapplers or Trail Grapplers for convertibles or coupes.
Buying used cars
Online or at a local dealership, you may find many used cars. There are many used cars available, but it can be difficult to find one that is in good condition. If you are looking to buy a secondhand automobile, be cautious because the vehicle may have been damaged in a flood. They may appear on the second-hand car market. Because the used car market is so hot, it’s important to choose carefully the vehicle that you want to buy.
To get the most from your current situation, you should try to obtain different offers on the vehicle that you own. Use this information to your advantage when looking for a new car. You can also ask for advice from professionals or mechanics to confirm that the vehicle worth purchasing is one you should buy.
New car market still out of reach
Even if consumers are willing, they cannot keep up. It is only possible to give a certain number of vehicle products via pre-orders or reservation, mainly for those who are prepared to wait.