Where are All the New Cars? Is my used Car More Valuable Now?
Have you driven by a new car dealership recently? Have you noticed how empty the new car lots are? There’s an explanation – a chip shortage. It’s another fall-out of the COVID-19 pandemic involving chip manufacturing for electronics – this time on a global scale.
Many industries felt and some are still feeling the repercussions. Whether video game companies are producing physical products or manufacturing phones, computers, etc., if it has a chip, odds are, the producer is affected.
Vehicles hit center stage in this context since the supply can’t keep up with demand.
Some manufacturers must leave freshly built vehicles in the lot after assembly to collect dust because they’re missing a chip. Not all manufacturers have managed to adjust and circumvent these hardships. As a result, most dealerships have more used vehicles for sale than new ones.
In turn, the used car market, for the most part, has increased in value, and a combination of a couple other variables have contributed to this.
As we approach deadlines banning internal combustion engines and manufacturers push towards electric vehicles (EV) and hydrogen powertrains, people have become more aware of older vehicles that hold a certain value.
For example, specific sports cars from the 2000s started to go up in value even before the chip shortage. Various older trucks, luxury vehicles and even some renowned commuter cars have also gone up in value. An old saying hypes their value: “They don’t make ‘em like they used to.” The current market further highlights that, increasing their value even more.
The second variable is one tailored to the current vehicle market. Typically, when you purchase a new vehicle, it will automatically depreciate as soon as you drive off the lot and continue to do so, with some vehicle brands depreciating at a higher rate than others.
But suppose you purchased a new car a year or two ago? Odds are, instead of continuing to depreciate, it may have actually stabilized or appreciated. Of course, this all depends on the make, model and condition of the vehicle.
As this shortage of chips continues, dealers – of both used and new vehicles – are targeting used means of transportation even more than before to keep the market going.
Xavier Estrada can be reached at firstname.lastname@example.org.