Car Prices Continue Rising As Inventory Remains Tight

Automotive Editor

Based out of the Washington, D.C. area, Joel Patel is an automotive journalist that hails from Northern Virginia. His work has been featured on various automotive outlets, including Autoweek, Digital Trends, and Autoblog. When not writing about cars, Joel enjoys trying new foods, wrenching on his car, and watching horror movies.

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, Automotive Editor - April 6, 2021

Because of the COVID-19 pandemic, automakers are facing a semi-conductor shortage. The shortage has snowballed into a massive issue that automakers haven’t been able to rectify and it’s officially starting to affect consumers. According to Edmunds, car shoppers looking for a new vehicle now are going to have a hard time finding a model they want on sale and are looking at paying more for both used and new vehicles.

The rise in pricing comes at a time when consumers are having trouble finding new and used vehicles at dealerships. The outlet claims that new vehicle inventory around the U.S. was down 36% in March 2021 compared to last year. The shortage of new and used vehicles is causing prices to increase. Edmunds forecasts that the average transaction price (ATP) of a new vehicle will hit $40,563 in March compared to $38,601 last year. The ATP for a used vehicle is expected to climb to $22,663 compared to $20,273 in 2020.

The semiconductor chip shortage is to blame for both the increase in pricing, as well as the shortage of vehicles. What started as something of a nuisance has turned into a massive issue. Jessica Caldwell, Edmunds’ executive director of insights, claims that “the chipset shortage has snowballed into a bigger crisis for the automotive industry.”

Toyota Tacoma

Consumers looking for full-size pickup trucks and large SUVs are the ones that are the most affected by the shortage and price increases. According to Edmunds’ data, truck inventory was down 60% in March 2021 compared to last year, while the ATP for a new model has increased $3,599 to $54,763. Used full-size pickup truck prices are expected to climb to $34,445 compared to $28,156 from last year. It’s a similar story for large SUVs, with the ATP of a new vehicle expected to climb to $67,542 in March (from $62,620 last year) and the ATP of a used model to reach $35,035 (from $31,232 a year ago).

Pickup trucks and large SUVs are some of the most popular vehicles on the market, so it makes sense that they’re the ones that are the most affected by the chip shortage. These vehicles are also the ones that offer the highest profit margins for automakers, which will certainly affect their bottom line.

Despite the ongoing chip shortage and the high prices for new vehicles, the majority of automakers are reporting higher first-quarter sales figures. Ford, General Motors, Chrysler, Ram, Jeep, Alfa Romeo, Honda, Acura, Toyota, Subaru, Lexus, Mazda, Volkswagen, Porsche, Nissan, and Hyundai all saw increases in sales in the first quarter of 2021. Porsche (45%), Acura (33%), Lexus (31.8%), Hyundai (28%), Mazda (23%), and Subaru (23%) saw noteworthy increases in sales. Seeing this many automakers post increases is surprising and a good note for the industry.