COLUMBIA, SC (WIS) – The Bureau of Labor Statistics reports a 5.3% price increase for new cars and 45.2% for used cars from June 2020 to July 2021.
The increase, according to car dealers, is due to a shortage of new cars due to a decrease in the production of microchips. Microchips are needed for every new car because they power all the electronics in the car, from Bluetooth to the brakes.
Demand is also on the rise, according to car dealers. People are eager to travel after the pandemic and many are in search of a new car. Due to the shortage of new cars, consumers turned to buying used cars, which drastically increased the price.
Bill McDaniels, owner of McDaniels Acura in Colombia, says he’s missing a few hundred cars.
“We should be selling a lot more cars than we are selling,” McDaniels says. “We are probably, in my opinion, the entire industry, probably close to 60% of what we should be selling at this time of year and what we should be stocking.”
Even rental car dealers are feeling the impact of the car shortage. Robert Abston, owner of A + Car Rentals, says his 60 cars are rented.
“I mean, I’ll buy another 60 tomorrow. I can’t, ”said Abston. “I don’t have the manpower to be able to hire the vehicles. I don’t have the option to buy the number of cars. I can’t find 60 cars right now that I can buy tomorrow.
Abston says the cars he was able to buy were bought at higher rates because of the shortage, up to $ 4,000 more than he would usually pay.
Research economist Joey Von Nessen says that only time can solve the problem of supply and demand.
“We know that there is currently a concerted effort to increase supply in order to meet this demand,” says Von Nessen. “The problem is, this is a long-term process and it takes several months to build up capital and the ability to generate more supply at a steady pace.”
Car dealers and economists estimate that the supply of new cars will be close to normal levels by early 2022.
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