On today’s show, we’re pleased to welcome Jessica Caldwell, Edmunds’ Executive Director of Industry Insights, to give us an update on the chip shortage and how it’s affecting prices in the new and used market.
Caldwell kicks off the conversation, giving a brief overview of the current chip shortage situation currently happening. Caldwells says we’re starting to really feel the crunch of the supply crisis. In June, numbers were affected in many areas across the industry. She also believes this is the worst of it. Chipmakers are working hard to get shipments out.
Looking at luxury sales, Caldwell says, they don’t look as affected. In terms of volume, they have to turn around, she sees them fairing pretty well. Everyone in the auto industry is finding ways to excel.
Every month Caldwell looks at the numbers and thinks, how is this even possible? When it comes to used- vehicles, she says, she’s never seen increases like these. Used car transactions prices are up 14% from last quarter (Q2). You don’t ever see that type of movement in three months. Caldwell says they continue to see numbers climb and don’t believe they’ve hit the top yet. Even though used prices are high, trade-in values are off the charts. The acquisition of used vehicles is a challenge.
As far as the SAAR going into August, Caldwell says, it simply comes down to inventory. You have a lot of consumers, shopping for vehicles but not finding the ones they want or at the price they want. The real question is, what is that pent-up deferred demand that will end up in Q4 or 2022?
Caldwell wraps up the conversation by sharing her thoughts on the impact on supply and demand. She says if you look at April where we had inventory and SAAR was fairly high, around 18 million. Maybe, for the year, we wouldn’t get to 18 million, but it would definitely be on the higher side. She says the variants of the coronavirus will affect how things are.
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