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Car supplies remain low, and some automakers might keep it that way

Consumer Prices
Posted at 10:59 AM, Aug 12, 2022
and last updated 2022-08-12 18:50:48-04

Car buying is not what it used to be, as shoppers find bare lots and inflated prices.

You won't find many discounts either. Carmakers and dealers are reporting strong profits. That's prompting some economists to believe the current system could be the future.

"This trend of vehicles becoming more and more expensive is something that is going to be entrenched," said Charles Chesbrough with Cox Automotive.

Federal data showed new car prices soared 30 percent over the pandemic. Production obstacles, like the global chip shortage, are driving up prices.

Chesbrough said many carmakers have focused their manufacturing solely on vehicles that'll make them the most money.

"So they're not making small compact cars, that type of thing, which generally have a very low margin. So that means the price of vehicles on average is much higher," he said.

He says there's very little reason to think the car industry will go back to how it was. In fact, franchised dealers recently surveyed by Cox reported strong profits despite having fewer cars to sell.

"This lean and mean environment has been very beneficial, and they're going to try to keep it going as long as they can," Chesbrough said.

So what does this mean for us? Be prepared to pay top dollar because finding exactly what you're looking for will be challenging.

Chesbrough said you need to think long-term to get the most for your money. But with how things are going, he said many Americans will be priced out of the new car market altogether.