New and Used car prices continue to Increase

The Perfect Storm-

You may have noticed some of your new car dealerships very low on new cars and trucks, and you may have seen some used car dealers very low as well.

With tax refunds and stimulus money hitting at roughly the same time in February and March, used car dealers had record months and were drained of inventory.

At about that same time, new car manufacturers started experiencing a shortage of computer chips to build new vehicles and this created an extreme lack of inventory for new car dealerships. With the lack of inventory, fewer trade ins are taken in and the new car dealers are also forced to keep more traded in used cars just to have something to sell. Thus now, a greatly reduced inventory availability for used car dealers.

With so many used car dealerships competing for so few vehicles, this drives prices up. Way up at this point. New car dealers are getting over sticker price on many new cars.

The computer chip shortage is projected to last one to two years. This means a huge shortstop of new vehicles for a good while and it will keep used car values inflated.

This not only impacts you the consumer trying to buy a vehicle, but it impacts all the dealerships and their employees. In many cases, salespeople have no inventory to sell, thus cutting their income dramatically. Many used car dealers simply are not getting enough vehicles to keep their lots profitable.

A very good local dealer here has had to downsize due to lack of inventory and lack of employees.

I do not see this changing in the next 12 months. It will probably get worse before it gets better.

To add to the problem, the current employment situation has almost every garage searching for qualified mechanics. This has garages at full capacity of work and a backlog of repairs. It is taking dealers longer to repair and process the few vehicles they are able to acquire.

What this means for the car buyer?-

This created the Perfect Storm.

Expect prices to remain high and selection low. It is not the best time for a consumer looking to purchase a new or used vehicle. Dealers can’t easily replace the new or used car you’re looking to buy so they have no incentive to “cut you a deal”. They must make every dollar they can reasonably make to pay the bills, pay the employees and keep business moving. I know many think it’s greed or taking advantage of the situation, however, it’s the simple economics of supply and demand.

I got a message through fb marketplace a couple days ago and a guy said “you’re asking $5,000 for that? What are you smoking? “

I agree it’s high, though I’m not. KBB on this particular car is now $5,800 where in January it would have been $3,800. Yes it’s high, but it is supply and demand.

At Competition Cars and Classics we have avenues of inventory to buy from many dealers do not. I spend hours on hours searching for vehicles at reasonable prices. We have been fortunate enough to keep our inventory levels good, though our mechanical processing times and dollar amounts have increased.

We do everything we can to still provide the best “deals” possible for our customers. I encourage anyone at anytime to always shop around for the best deal, but remember, the lowest price is not always the best deal. Mechanical reconditioning, vehicle history, cosmetic condition and most importantly title status are all factors. We try our best to never sell a rebuilt or salvage title vehicle. Many dealers around thrive on those vehicles. I cannot and will not compete with the prices of a salvage titled vehicle.

I want to sell a vehicle with an upfront disclosure of anything we know of wrong with it, if there is anything. Our vehicles will be gone over mechanically by a qualified mechanic and we will repair what we see fit and disclose what we leave for the buyer. We do not make any vehicle perfect and we cannot make them new again. We will never sell a vehicle that we think has a safety issue and portray it as a road ready car.

We sell all vehicles as-is and recommend you to take it to your mechanic for inspection BEFORE buying.

There is no mechanic that can predict the future but an inspection is an opportunity to spot items needing attention soon. Some vehicles will breakdown after we sell them, it’s just a fact of life. We are not perfect, our cars are not perfect, and we will do our due diligence to let you know what you are buying and give you the opportunity to say “no, I don’t want to buy your car.” But, if you do find a vehicle with us that is perfect for you, we will do everything we can to give you a fair price, and a friendly and appreciative buying experience.

We don’t want to “sell” you a car.

We want you to buy a car from us because you want to. We want you to buy a car because you like it, you need it, you think the price is fair, and because you understand what condition the car is in and you are happy with it and with us.

This will pass in time and there will be “deals” again. In the meantime, know that we are fighting for you Salem, Va., fighting for the deals everyday, and we ain’t smoking anything!