Pandemic Inflation Hits Maine Auto Market, Particularly For Used Cars
Cars are the stars of Inflation 2021.
New cars are scarce and dealerships don’t move much on prices. Used cars are particularly expensive, which drove prices up earlier this year.
This reflects the new reality for buyers and sellers, according to the head of one of Maine’s largest auto dealer chains, although he said there were nuances beyond high prices and the shortage.
Adam Lee, whose family operates 19 dealerships in the state, said the pandemic had hit the auto industry hard and it was no easier to emerge from the shadow of the coronavirus.
Last year, dealerships were forced to shut down for months and adopt new methods of allowing customers to take a test drive and handle all the paperwork involved in a sale. At the same time, car rental companies were cutting inventories and canceling purchases, as business and leisure travel had all but disappeared during the height of the pandemic.
Used car prices and demand increased dramatically earlier this year, but have since shown signs of slowing down.
Yet the average US price of a used car in June hit nearly $ 25,000 – a record high – according to the Bureau of Labor Statistics. The average price increased 45% from June 2020 to June 2021, and more than 10% from May to June alone. According to Atlanta-based Cox Automotive, owner / operator of Kelley Blue Book and Autotrader.com, dealers said they had enough used car inventory for 34 days of demand in June, 11 days less. than they reported for the same month in 2019.
Even high mileage cars sell for high prices. California-based auto information service Edmunds.com said the average price for a car 100,000 miles or more was $ 16,489 at the end of July, up 31% from the previous year .
Automakers have also been forced to adapt, cutting production to reflect slowing sales and changing the way their factories operate to reduce the spread of the virus. Disruptions in the global supply chain have created shortages of key manufacturing components such as microchips and some plastics.
This can be seen in the dealer lots. Lee said he would normally have 1,200 new cars in the batch at his Westbrook dealership, but now the number is only around 200.
Now that car rental companies are buying again after more than a year of relative inactivity, that means individual buyers have less choice, Lee said.
Automakers are not raising sticker prices in response to the new market, Lee said. It’s rare for automakers to raise prices mid-year, he said, but there are fewer incentives offered to buyers, and his sellers don’t have much leeway or leeway. incentive to negotiate.
“It’s one of those rare times when, if the dealer says, ‘If you want it, you should buy it today,’ believe them,” Lee said.
Lee said lower inventory means less selection and those looking for a new car shouldn’t expect an influx of new cars in the coming weeks, which will give them more options. Its upcoming Toyota delivery, for example, consists of around three dozen cars, and of those, 17 have already been sold.
Dealers always work with other dealers to research specific models and option packages in a competitor’s field to see if they can find the exact car a buyer is looking for, Lee said, but with all dealers facing low inventory, this can be difficult.
“You just don’t have the same selection,” he said. “It forced us to be a little more creative, but we’re trying to find a way. We are disjointed.
The limited choice of new cars has led many buyers to search the used car fleet for what they want, and prices for these skyrocketed earlier this year, Lee said. But used car prices are more volatile than new car prices, he said, and they have already started to fall.
Lee also said used car prices tend to drop a bit as the market softens and then drop more sharply as dealerships become more eager to sell.
Maintainers dig deeper to pay for goods and services as inflation rises