Over the past few years, production, selling and buying within the vehicle industry have all undergone some significant changes. A shortage of computer chips has affected the manufacturing of new cars, creating a high demand for used cars. As a result, buyers are either forced to put their names on a long waitlist for a new car, or pay more for a used car than it’s actually worth.
If you’re considering a career in the automotive industry, being able to understand price fluctuations within the automotive industry will help you to gain a clearer picture of the factors influencing the industry. Below, learn more about the reasons that the price of used cars is increasing.
Shortage of Computer Chips Affecting Auto Manufacturing
In the past year, there has been a significant shortage of computer chips, disturbing the manufacturing of new cars. These chips, also known as semiconductors, are in demand due to the increase of electronic components in vehicles requiring this technology. The shortage was exacerbated during the pandemic, when many consumers bought new computers and household goods to make working from home more accessible and life in lockdown more enjoyable. Because the computer chip was in such high demand, the global auto industry produced 4 million fewer cars than planned this year. If you’re in auto mechanic college, it’s possible that you’ll see this car shortage affecting your customers in the long run.
A New Situation for Auto Dealers with Car Mechanics Training
If you’re interested in working at a car dealership after auto mechanic school, it’s important to be aware of the lack of new inventory that most dealerships are facing. An example is the Glenmore Audi Dealership in Calgary, Alberta. This dealership usually has around 300 new vehicles for buyers to choose from, with different colours, options, and features. Now, what’s displayed on the floor are the only options available. Most of their sales come from orders, but customers still wait a long time to receive their vehicle.
As for used car inventory, the situation is roughly the same. Usually, dealers will have around 80 vehicles in stock, but now they see an inventory of 20. To keep up, some dealerships are calling customers and wondering if they are planning to sell or if they would like to trade their vehicle. They’re also looking to Facebook Marketplace and Kijiji for other sources of inventory, but the prices of those vehicles usually run pretty high.
After auto mechanic college, you’ll see that dealerships are struggling with inventory supplies
Rental Car Companies Fighting for Used Cars
With the decrease in new and used cars, rental car companies are also affected. Usually, rental companies such as Hertz buy new vehicles directly from manufacturers. Because of the lack of new cars, automakers have pushed rental companies to the back of the line, prioritizing deliveries to dealerships that have customers waiting for their ordered vehicles. This has left rental car companies bidding at used car auctions, trying to fill the demands of their customers.
While we’re likely to see the price of used cars drop in the future, for now, it’s a reality that the automotive industry is grappling with. If you’re training for a career in the industry, keep an eye out for changes in the market or indications of price increases or decreases.
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