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Car industry recovering from pandemic as demand for used cars surge

"Used car prices have been going crazy."
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Posted at 5:28 PM, Jun 28, 2021
and last updated 2021-06-28 23:27:18-04

BAKERSFIELD, Calif. (KERO) — Are you looking for a new car? Or maybe you have a car you've been thinking about selling? Now is a great time to do so as dealerships deal with a shortage.

If you've driven past a few car dealerships some may look empty. That's because between a chip shortage and used cars being in high demand many dealerships are having a hard time keeping new and used cars on the lot.

Matt Delorenzo, the senior managing editor of Kelley Blue Book says the pandemic shutdown car production and caused a microchip shortage for new cars which has now put a premium on used cars.

"In the last year used car prices have been going crazy. We're seeing that the average value of used vehicles going up almost 30% from a year ago."

But is that shortage impacting Kern County?

Local auto dealers say yes.

"In April of this year, we saw a one-month increase in used car prices of almost 20%," said John Pitre, Chief Operating Officer for Motor City Auto Center. "It's an unheard-of phenomenon in the used car industry that prices would adjust 20% in one month."

Christian Guerrero, the sales manager at Three-Way Chevrolet-Cadillac agrees.

"I've been doing this for over 20 years, and usually vehicles depreciate. Right now is the first time I've seen where they go up in value."

Delorenzo says manufacturers are learning to cope with the shortage by taking features out. He says the average price of a used vehicle is about half of what a new vehicle would cost. Right now the average price of a new car is about $40,000 and that's a range for all vehicles and a wide range of used vehicles are running between $20,000 - $25,000.

Delorenzo says the microchip shortage has caused manufacturers to dial back production, so a lot of popular vehicles are in tight supply.

Is it better to buy a used or new car right now?

Delorenzo says it depends on your need. If you're shopping for a new car look for a compact, economy, or mid-size cars. If you want a new SUV like the new Bronco or the always in demand pickup truck he says you're just not going to find it at the best price and even possibly above sticker.

Delorenzo says get online and do your homework and see what the inventory looks like and what deals and incentives are out there.

"If you need a car and you're going to go into the market you're going to get a premium for your car but you're going to pay a premium for whatever you replace it with. So it's almost like a zero-sum game in that regard but if you do have an extra car and you weren't thinking of selling it, you may want to change your mind and see what it's worth."

All the auto experts expect the shortage to ease up by the end of this year. But if you are thinking about leasing Pitre at Motor City says it's a good time to look at leasing options because interest rates are still extremely low. Delorenzo says if you are in a lease find out what your buyout is because it might be worth it to buy your leased vehicle and sell it for a higher price.