In case you’re trying to purchase a brand new or used automobile proper now, count on increased costs. In case you go to a dealership, do not count on to see tons which are stuffed with automobiles with completely different color and style choices. And you might have to be ready to attend a while on your automobile to even arrive, as many patrons are doing presently.
That’s the results of a international semi-conductor chip scarcity attributable to the pandemic. It is affecting the variety of automobiles being constructed and the variety of automobiles at dealerships all around the nation and right here in Northeast Ohio.
However there’s a vibrant aspect to this provide chain situation: The trade-in worth in your used automobile has probably by no means been increased.
Within the showroom of the Axelrod Buick GMC dealership in Parma, a shiny new GMC Yukon sits proudly with a giant pink bow on the windshield. It’s one in all solely two automobiles within the showroom — and it’s spoken for, in keeping with Barry Axelrod who took Ideastream Public Media for a tour of his automobile lot.
“Usually, this whole lot is crammed with Buicks,” Axelrod stated. “These are all my worker automobiles. This lot is totally empty. At night time, in case you have been to come back right here, you’d see this lot fully empty.”
Then he walked to his used automobile lot. Usually, he has so many automobiles, they’re parked head-on, aspect by aspect, one after one other. Now, he has his used automobiles spaced out and sitting horizontal to the road.
“To make it seem like now we have extra automobiles than we do, as a result of if this have been empty, folks would suppose we have been closed and simply proceed driving by,” Axelrod stated.
Usually, he would have 250 new automobiles on his lot — a couple of 3 month provide. Now, he has 20.
“What’s taking place is we’re getting some automobiles in, however we’re promoting them as rapidly as they arrive in,” Axelrod stated. “Lots of people, they’re shopping for automobiles. They’re shopping for them earlier than they arrive in. Previously, anyone may very well be explicit about what they need, the colour… You must have extra flexibility,” Axelrod stated.
The Axelrod Buick GMC dealership in Parma has been a household enterprise for a number of generations. Proprietor Barry Axelrod stated due to provide points, automobiles are being bought proper after they get on the lot, and even earlier than a automobile will get off the truck. Consumers right now, he stated, want to be versatile with the type of automobile they’re in search of. [Jenny Hamel / Ideastream Public Media]
Total, there’s been a big dip within the variety of automobiles Axelrod sells in comparison with earlier than the pandemic began. So, he’s needed to lower prices, partly by lowering his gross sales workers and spending much less on promoting. He’s “skinnied again” his enterprise, he stated.
That is an industry-wide situation. And, merely put, when you have fewer automobiles and your demand is excessive, costs take a hike, in keeping with Lou Vitantonio with the Better Cleveland Vehicle Sellers Affiliation.
“Your costs begin to go up. And that is what’s taking place with the cars, both on new automobiles, but additionally the used-car market goes up as properly,” Vitantonio stated. “If there is not any skill to purchase a model new automobile, due to a restricted provide, then your used automobile choice is your second best choice. And now the used automobile market in pricing is up significantly as properly.”
That’s the upside to this provide and demand situation.
“Your trade-in worth, the worth of the automobile you are driving and you are going to commerce to get a brand new one, goes to be that a lot increased than it was earlier than,” Vitantonio stated.
That was Lakewood resident Brad Tunstall’s expertise. He lately helped his mother commerce in a single leased automobile for one more on the similar Mazda dealership he’s been working with for 15 years. The deal occurred actually quick after speaking with a supplier on the cellphone, in keeping with Tunstall.
“He (the supplier) really instructed me on the cellphone that day, ‘I can get you out of that lease. Your automobile’s acquired fairness in it. We’ll provide you with a reasonably substantial supply, which might be your down fee in your subsequent automobile,’” stated Tunstall. “He instructed me, ‘In case you can are available tomorrow, I’ve acquired a automobile coming off the truck. It is a Mazda CX-5, a model new one.’ He stated he would get me into that automobile, which is the following trim degree up from what we presently had.”
Tunstall ended up serving to his mother get a nicer Mazda at a decrease month-to-month charge with no down fee. Tunstall himself has been searching for a brand new or used Toyota 4Runner on the gross sales web site Carvana, and it’s not going properly.
“Those that I checked out appeared about, in all probability round $10,000 greater than I used to be anticipating. However there’s nothing on that web site. I imply, there’s a list there, nevertheless it’s simply the costs are outrageous proper now,” Tunstall stated.
The used automobile stock at the Axelrod Buick GMC dealership is just not almost as strong because it was pre-pandemic. [Jenny Hamel/ Ideastream Public Media]
So, how lengthy will this provide situation go on? When will they get sufficient semiconductor chips made to construct sufficient automobiles to adequately meet demand?
“We’re anticipating this to go properly into in all probability all of 2022” Axelrod stated. “Basic Motors has principally stated to us, ‘, the way in which your lot appears to be like right now is the way in which it’s going to in all probability look a 12 months from now.’”
The dealership has been in Axelrod’s household for a number of generations, and he can bear in mind some darkish durations, like within the early 80s when nobody was shopping for automobiles as a result of rates of interest have been hovering round 20%.
He stated he’ll cope with this provide situation, and he’ll do what he can to get the precise automobile into his prospects’ arms.