As gas prices continue to climb, more shoppers are turning their attention to EVs, according to Edmunds. Today on inside Automotive, we’re pleased to welcome back Jessica Caldwell, Executive Director of Industry Insights at Edmunds, who discusses EV considerations and Q1 auto sales performance.
For the first quarter of 2022, automakers remained challenged by manufacturing disruptions due to COVID-19, the war in Ukraine, and many other factors. From Caldwell’s perspective, optimism is starting to wane in terms of when new vehicle inventory will return. Despite this, car dealers are still very profitable, and if the inventory was available, Caldwell believes dealers would have no trouble selling it because demand is so high.
The big challenge for auto dealers right now is retaining customers when their preferred vehicle models are not in stock. There is a big potential for those customers to seek products from your competitors, or even buy from disruptors like Carvana.
Gas prices have hit record highs over the past few weeks as well. Caldwell says that Edmunds website was flooded with traffic to electrified vehicle pages. While she doesn’t expect these consumers to make an EV purchase overnight, product awareness has certainly gone up. If gas prices stay high for a long period of time, car buyers will likely start to reconfigure their budgets and consider different transportation options.
This is not the first time gas prices have skyrocketed. In 2008 and 2009, many consumers were trading in their large pickup trucks and SUVs for smaller vehicles with better fuel economy. However, that option is very limited for customers today due to the lack of inventory.
As an alternative, car buyers are looking to the used car market. Some consumers simply can’t afford a new vehicle. With that said, used car prices are also spiking. Comparatively speaking, consumers aren’t necessarily getting better deals for used cars. They might be saving a little money on the surface level, but value-wise, both new and used segments are relatively close. In fact, used car payments have exceeded $500, resembling new car payment levels.
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