Low Auto Inventory and Higher Prices Wear Down Frustrated Car Shoppers

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Quarterly vehicle sales are expected to decline for the first time this year when industry automakers report their third-quarter results on Friday

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A key driver behind the decline is a lack of car-and-truck inventory as auto makers face global computer-chip shortages that are denting factory production, according to dealers, analysts and auto executives. It is expected to last till next year.

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With inventory tight, consumers are paying top dollar to get the vehicle of their choice, prompting some shoppers to hold off on purchases. There is disappointment among buyers of both new and used cars as there is less supply of vehicles across the board.

“Car prices are just starting to go crazy, and I decided I could wait for it,” said Sean Hutchinson, a Chicago-based writer and educator who bought a vehicle to replace his nearly 20-year-old Mercury Grand Marquis last year. The search was started. While he was now making more money and wanted to upgrade, the current car market is too expensive, he said.

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“I just stopped watching completely,” said Mr. Hutchinson.

Auto-industry sales showed signs of slowing in the summer months as dealers said they were having trouble keeping cars and trucks in stock. Since then, semiconductor shortages have continued to take their toll, disrupting auto production throughout the summer in the US and globally.

A late August Kelley Blue Book survey of US car shoppers found that 48% of respondents were likely to postpone a vehicle purchase because of a lack of a chip. Of the buyers who are likely to defer, 40% say they are willing to wait seven months or more.

When that same survey was conducted this spring, 37% of respondents said they were planning to delay purchases, Kelley Blue Book said.

The shortage of semiconductors, used in components of vehicles as diverse as touch screens and air bags, is not showing any signs of diminishing. That’s expected to expand into next year, said Jessica Caldwell, an analyst at the car-shopping website Edmunds.com, leaving the auto industry in a difficult position and leaving buyers few options.

“For a while, I think people were trying to find ways to make it work, and now it’s getting to the point where it’s going to be difficult to do that,” Ms Caldwell said of car buyers. .

Earlier in the year, the stock crunch was helping dealers and car companies to be more profitable as they could sell models even if they charged more than the sticker price in some cases.

But inventory levels fell to a record low in late August, and by September, the impact of the lost sales began to show, dealers say.

Mike Sullivan, head of LAcarGUY, a Santa Monica, California-based with about a dozen dealerships, said his stores were able to offset lower sales with higher per-vehicle profits in July and August. Then in September, margins started getting affected.

Mr Sullivan said he is concerned about losing longtime customers, who probably won’t return to him if he doesn’t have a car to offer them.

“It’s been really tough,” he said. “We have to work really hard to bring those people back.”

John Morrill, owner of Planet Chrysler Jeep Dodge Ram in Massachusetts, said it is difficult to assess what the true demand is for some models right now. For example, not more than one Jeep Wrangler has arrived at his lot in the last 45 days, which may cause some buyers to bypass his store due to low stock, he said.

“We all know that demand exceeds production,” said Mr. Morrill.

Nora Naughton at [email protected]

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