Why Vehicles Prices will Remain High in 2022
At least once a week I get a client asking me if I knew that cars are priced higher at the moment due to the pandemic. When I explain that yes, as a professional I am well aware of current pricing trends, they often ask me why vehicles are priced at a premium right now.
Rather than offer an overly-technical explanation and watch my client’s eyes glaze over through video chatting software, I offer this simple, brief, explanation. In the first quarter of 2020, when everything shut down, including automakers, and their suppliers, or when they switched over to making ventilators and PPE for a few months, vehicles were not being assembled at all. This meant new vehicles were not being built for a period of several months. It was during this time that the majority of automakers notified their semi-conductor/microchip suppliers of greatly reduced orders due to expectations of a greatly reduced demand over the coming year.
Well the chip suppliers took these now excess chips and sold them to manufacturers of fitness equipment and electronic entertainment. By the second half of 2020, the economies of North America and Western Europe were coming out of hibernation. People who had traditionally relied on public transit no longer felt comfortable using it. At the same time, remote work had enabled an exodus of formerly urban people relocating to more suburban and rural areas where cars are necessities.
At the same time, people who were planning on trading in or selling their current cars to upgrade aren’t doing so because of economic uncertainty or just lack of new car availability. When the automakers asked for an extra-large order of chips they were effectively told to go to the back of the ordering line.
So here we are in early 2022. While last year vehicles were in short supply, the supply chain is recovering. While cars still won’t be stacked tall on dealer lots and selling cheap, they will be more available as the year rolls along. By the first half of 2023 the supply chain will have hopefully normalized.
In the mean time, vehicles including: cars, trucks, SUVs, crossovers, minivans, pickups, and motorcycles are all priced at a premium. So if you are looking to purchase your next vehicle, and you want to avoid overpaying, while still getting a vehicle you love, reach out today!
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