Photo: YouTube Screenshot/Maple Motors Muscle Cars Nick Southgate
If you ordered a new model of your previous-gen car, you've probably noticed it's a little bit pricier. There are a lot of factors behind the sudden upward surge in automobile prices, and automakers are blaming it on a microchip shortage and the global health crisis.
If you thought the used cars market could offer some relief while you wait out the effects of last year's record high auto prices, you could be in for a surprise. Goldman Sachs says both new and used car prices will keep soaring in 2022, CNN reported.
A shortage of microchips and limited production due to the global health crisis have created a domino effect that has trickled into the used car market. As a result, car dealers charge a premium price for whatever fleet they have available - including used cars.
According to Goldman, new and used cars will peak throughout the first and second quarter of 2022, and uncertainty around the health crisis could even shoot the prices higher. Therefore, if you waited for auto prices to fall before buying a car in 2021, buckle up. The wait could last a little longer.
In the U.S., the government blamed much of the rising inflation rates in the country on the used car market. According to data from the U.S. Bureau of Labor and Statistics, used cars' contribution to inflation in the last 20 years averaged zero. It's currently at 1% on a year-over-year basis.
In the U.S., inflation lifted prices across all industries in the last 12 months, but the automobile market has seen some of the most significant increases. The cost of used trucks and cars has been amongst the biggest drivers of inflation in 2021. Their prices rose by 31% over the last year compared to 11% for new vehicles.
Auto manufacturers expect the supply of microchips to improve over the year, which will significantly help with inventories taking the pressure off the prices. Ultimately, it could lead to the return of car buyers paying less than the sticker price.
A shortage of microchips and limited production due to the global health crisis have created a domino effect that has trickled into the used car market. As a result, car dealers charge a premium price for whatever fleet they have available - including used cars.
According to Goldman, new and used cars will peak throughout the first and second quarter of 2022, and uncertainty around the health crisis could even shoot the prices higher. Therefore, if you waited for auto prices to fall before buying a car in 2021, buckle up. The wait could last a little longer.
In the U.S., the government blamed much of the rising inflation rates in the country on the used car market. According to data from the U.S. Bureau of Labor and Statistics, used cars' contribution to inflation in the last 20 years averaged zero. It's currently at 1% on a year-over-year basis.
In the U.S., inflation lifted prices across all industries in the last 12 months, but the automobile market has seen some of the most significant increases. The cost of used trucks and cars has been amongst the biggest drivers of inflation in 2021. Their prices rose by 31% over the last year compared to 11% for new vehicles.
Auto manufacturers expect the supply of microchips to improve over the year, which will significantly help with inventories taking the pressure off the prices. Ultimately, it could lead to the return of car buyers paying less than the sticker price.
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