As the North American vehicle shortage continues, and automotive dealers are getting creative to keep business moving, shoppers are getting creative to get the car they desire.
Consumers are dealing with the question of car ownership in different ways. Some are selling their cars to dealers for cash, some are using newer search portals like MotorCloud.com and Offerup. Others are expanding their searches out-of-state, or buying out their leases from dealers instead of turning in their vehicles. In this new automotive landscape, more new consumer methods for getting cars are sure to emerge.
Due to the vehicle shortage, new car pricing has increased roughly 19% since last year, according to JD Power and LMC Automotive, and the average used car has increased 46% in the last two years. Many dealerships have a waitlist of months to get a new vehicle, and most dealerships’ allocations are sold before they hit the front line. As more shoppers are confronted with this reality, many are choosing to sell their cars to dealers for cash, instead of trading them in, and keeping the cash or using it to shop on other, less traditional platforms. Many customers are also buying out their leases instead of turning them in, as higher vehicle values are offsetting the depreciation expected when the lease originated a year or two ago.
Shoppers are also looking outside their local areas, realizing they may need to go farther to get the car they want, as vehicle supplies have dramatically tightened.
“While we’ve seen a million less new cars, used cars are stabilizing. Our unit count of 3.2 million dropped to 2.1 million, but now it’s stabilized, so it appears there is some light ahead,” said MotorCloud Co-founder, Ted Reckas.
Online shopping sites and dealers have both responded by building in shipping services as an increasingly standard part of the buying process. And in the digital world, customers are looking beyond traditional sites like CarGurus and AutoTrader, in an effort to track down harder to find inventory. Our sister company MotorCloud.com has seen a big increase in monthly unique visitors, up 214% over the last six months, which they attribute mainly to having a greater supply of inventory.
Some auto manufacturers have indicated a return to normal production is on the horizon; market forces are moving towards solving the chip crisis, with major new chip factories being built by Global Foundries in New York, Texas Instruments in Texas, Intel and TSMC in Arizona, and a major manufacturer in North Carolina has pivoted to semiconductors. It was exciting to read about this last month, as we anxiously await chip supply increasing in favor of dealers and the customers they serve.
When exactly we will get there remains unclear. But when it comes to consumers, whether it’s new tactics for locating a car, converting a car to cash or leveraging an existing lease for whatever the consumer wants next, the market will undoubtedly do what it always does: find new ways to satisfy demand and move forward. Those in business who innovate to meet the moment will thrive.