- The frenetic auto market pits car sellers against each other, Bloomberg reported.
- Prices for new and used cars have skyrocketed during the pandemic due to a shortage of vehicles.
- Some dealers even invest to buy vehicles leased years before their tenure ends.
The pandemic has disrupted the market for new and used cars, causing prices to skyrocket and inventory dwindling.
A buying frenzy – coupled with soaring prices and a historically low vehicle supply – has turned car salesmen into enemies, a dealership employee said. Bloomberg.
“It’s really ruthless,” said Jared Luner, salesperson at Columbia Honda in Missouri. “Usually we’re all friends and colleagues, but right now when someone stops it’s a little nervous.”
Luner said he recently asked a fellow salesperson to sell him a vehicle. Hawking cars have always been a tricky business, but now, with dealerships suffering from a devastating shortage of new and used vehicle inventory, there aren’t as many sales to be made.
New car inventories in June were less than half of 2019 levels, according to Cox Automotive. And the crisis is only getting worse as a global shortage of computer chips continues to force automakers to slow production lines and cut manufacturing targets.
Mark Scarpelli, who owns two Chevrolet dealers in the Chicago area, recently said The New York Times its lots generally number between 600 and 700 cars. Today, there are only 50 left.
While the chip shortage has a direct impact on the supply of new vehicles, it is also bringing a new wave of customers into the used market, reducing inventory and driving up prices. It all happens like demand for cars remains strong, partly because low interest rates, a robust economic recovery and ever-changing travel habits due to the pandemic.
The insane market has driven dealers into increasingly clever ways of getting used cars for sale.
Dealers are so short of inventory that they call tenants – whether they’ve sold the vehicle or not – and offer to buy leased vehicles for high margins, said Ivan Drury, senior knowledge manager at Edmunds, to Insider.
“They are contacted right now and they are told, ‘You can sell this. We will not only pay the redemption price. We’ll pay all of your payments and give you a check on top of that, “Drury said.” The dealers are in desperate need of inventory. They’re prepared to make those payments, pay that buy-back price, and get that piece of inventory back. “
The supply crisis is so severe that Drury has heard of people who have less than a year of three-year leases and who have been contacted by dealers. Since used car values are so astronomical right now and many people haven’t driven that many miles on their vehicles, those who are in a position to part with a lease are ready to sell it to a dealer or online retailer.
“In fact, you’ll make money in this situation because the supply is so exhausted,” Drury said. “There is a lot of power for someone who currently owns a vehicle.”
Are you a car dealership, owner or private seller with a story to share on what it’s like to buy and sell cars right now? Did a dealership offer to buy your used or rental car? Contact this reporter at [email protected]
