TEXAS, USA — Drive by any dealership in the United States and there is a good chance that their inventory is way down while the lot is, at best, half-empty.
So is now a bad time to buy a vehicle or is it possibly a good time to sell your vehicle?
Vehicle sales were expected to fall to 1.2 million units in August, nearly 9% below the average last year.
Interest rates are low which provides for purchasing power, but then why are sales slumping?
"The semiconductor chip shortage is reducing the supply of cars at the same time interest rates are making it easier to finance purchases," said Neil Vannoy of Vannoy Advisory Group Inc. "So you have reduced supply and possibly increased demand interacting to lead to skyrocketing car prices."
The average transaction price for a brand new car in June 2021 was more than $42,000, according to Kelly Blue Book.
Used car prices also reached a record high in the same month at $25,000 for vehicles that averaged over 68,000 miles, according to Cox Automotive.
"Car prices should level off, if not decline a little bit, when the chip shortage is over," Vannoy said. "So it's probably a good idea to postpone making that purchase if you don't have to, to avoid paying top dollar and possibly stretching your budget too much."
But just how long will that be?
With the chip shortage disrupting global car production, a leading German car industry figure said it could continue into 2022 and even into 2023.
"I've hear anecdotal stories of people being offered more for their car than what they paid for a few years ago," Vannoy said. "If you have an extra car you don't need or you're a two-car household and you considered going to one car for a while, now may be a good time to sell a car."
Similar to those who sell a house during a house boom phase are left wondering where they will live once they sell their house, consumers are left wondering what would they drive once they profit off selling their car during this period.
So, you'll have to choose the best option for you and your family.