Most cars, including electric and hybrid, are still hard to come by: High demand and low supply lead to dealer markups

Most cars, including electric and hybrid, are still hard to come by: High demand and low supply lead to dealer markups



Since the beginning of the year, I’ve had many calls from people wanting to purchase hybrid or electric vehicles. Unfortunately, this cannot happen for at least a year as nearly all dealerships have around 100 sold orders with non-refundable deposits. 2022 is not a good year to buy electric.

Some Beaverton readers have asked about any car availability and again, the answer is the same. Why?

If you’re asking this question, you’re not alone. The simple answer would be to blame the pandemic and resulting supply chain disruptions. When COVID-19 brought the economy to a halt back in 2020, automakers canceled orders for semiconductor chips. Chip manufacturers then signed contracts with other businesses making automakers take a back-seat in the supply chain hierarchy.

Back in 2019 and early 2020, large dealerships were selling somewhere around 300 new vehicles with normal allocations, as well as normal productions of new vehicles. With the micro-chip shortage, dealers are getting maybe 25% of their normal amount of new inventory.

Manufacturers are not building everything too. With all the shortages, they are building what makes sense and those are quickly snatched up. In fact, if you look at many lots, you’ll see models that are not super desirable. However, if you need a car, you need a car, and many buyers settle.

Because of these ongoing challenges, production isn’t expected to return to normal until 2023 and inventory levels may not rebound until the second half of next year. Likewise, substantial cash incentives likely won’t reappear until inventory levels are restored and new-car prices may continue to climb in the meantime.

Experts now say that the days of rebates and special financing, as well as being able to negotiate a lower price, is over. Some say that being able to buy a new vehicle for MSRP will be a victory. Currently, used vehicle pricing is near 20% of the Kelley Blue Book retail vale, and very few dealerships will sell a new vehicle for less than $5,000 above the MSRP. Some vehicles are being marked up as high as $10,000 above the MSRP and I even heard of one case where a new GM Full sized Diesel Truck was listed at over $20,000 above MSRP!

The moral of the story here folks is to not waste time driving around or calling a bunch of dealerships. If you really need a car, you may have to settle for what’s available or ask an auto Broker who has dozens of contacts to source a vehicle for you.


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