Why does it seem like new car prices are much higher than before?

Why does it seem like new car prices are much higher than before?



Hello Loyal Beaverton readers. A big thanks to all of you who have written and called in. We surely appreciate all of you!


Is it my imagination or are car prices unusually high these days?

Yes! Vehicle pricing has been greatly affected by the COVID19 Virus. This along with the lack of vehicles new and used is the problem. Please allow me to share how truly awful it has become: most dealership have now set pricing at full MSRP for all new vehicle inventory. Plus, on pre-owned vehicles the pricing is also high. In fact, so much so that used vehicles are priced well above Kelley Blue Book values.


Waiting for microchips

What the general public is not aware of is that in manufacturing a new vehicle, there are several components that are in very short supply and the biggest issue currently is the microchips needed for all of the computers that are now onboard. I recently read an article that there were nearly 40,000 vehicles that are currently built but could not be shipped out to the dealerships because they were still awaiting the final microchips to complete the build.


Record level prices

Currently, dealership lots have only a fraction of the vehicles that they would typically have in both new and used vehicles and this is causing pricing to reach record levels. In fact, nationally pricing is up 8.5% over last year. Auction pricing is up 26% over last year as well so there really aren’t any great deals to be had (although brokers like myself with lots of contacts can still scrounge up a good deal or two).

These pricing surges are a direct result of massive job losses. A huge amount of people now working from home has also helped cause a 30% surge in auto pricing.

To make matters worse, this comes at a time when auto plants around the globe are closed or running at reduced production due to the computer chip shortage. New car production in North America is down about 3.4 million vehicles in the first three months of this year, according to Cox Automotive. The used car market is just as tight, with some measures of supply and demand in the sector showing the greatest scarcity on record.

I hope this information has been useful to everyone, as there are a lot of different factors to this huge equation. Thank you all again for reading!


If you have comments or questions, please feel free to reach out to me: fergusonautobrokers@gmail.com or visit fergusonautobrokers.com

If Anyone needs help in purchasing a new or used vehicle of any kind, or has an unused vehicle to sell please let me know. Please feel free to check out our website at www.fergusonautobrokers.com