Cars May Not Fly Yet, But the Price to Buy One is Soaring

If you’re in the market for a new car, expect to pay sticker price. “Yes,” says Roger Elswick, president of the Houston Automobile Dealers Association. “That is primarily related to a reduction in incentives that the manufacturers are providing because they can’t keep up with the demand.”

Deals are not to be had as a shortage of computer chips cripples manufacturing worldwide and drives prices up. It’s those basic rules of supply and demand that we keep running in to. There is exploding demand for the purchase of new cars, and used cars, something Elswick has seen at his Community Toyota dealership in Baytown. “We had a customer come into our showroom trading in a 4 Runner, and we paid him more than what he paid for years ago!”

There just aren’t many used cars available, sending prices upward, whether you are buying one or trading your old one in. J.D. Power pegs the cost of a new car at 8.4% higher than it was this time last year with an average cost of about $37,200.

That’s sending some buyers in to the used car market, but they are finding higher prices and scarcity there as well. Used cars sold at auction are up 26% year over year, the used car retail market up 7%.

In July of last year, with lockdowns in place across the country, car dealers saw auto sales drop by 30%, their worst quarter since the Great Recession.

And it’s not just a shortage in computer chips that is hampering the supply of available new cars. Tires are said to be in short supply.

photo: Getty Images

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