At the New York Auto Show this week, Toyota North America’s Executive Vice President Bob Carter said that the high and rising prices of vehicles are here to stay for at least another year. He noted that automakers would be short of demand by an estimated 1 million vehicles this year due to parts shortages, which will, in turn, lead to prices staying at very high levels.
Carter told reporters he “[doesn’t] think the cycle is over” and is worried about next year due to customers’ possible unwillingness to pay what automakers are charging at that time. Ultimately, he believes the “sticker shock” will not end soon, which may or may not lead to consumers refusing to pay the prices.
Carter told Bloomberg that the “tight car situation” for both new and used vehicles is “probably going to be with us for another 12 to 15 months.” He expects the issues to continue “well into 2023” and said it may take until the third quarter to see some level of normalization.
Carter also cited the rising costs of parts and materials such as steel, which has recently seen a 50% price hike. Automakers are still offering very few incentives and discounts that are significantly lower than averages from a few years ago. Non-luxury car prices have increased nine percent from 2020, now averaging over $42,000.
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