HENDERSONVILLE, Tenn. (WTVF) — Used cars are appreciating in value, and new cars are harder to find as supply chain issues impact local dealerships.
An empty showroom is not exactly what shoppers want to see if they're buying a new car. At Hallmark Hyundai, they don’t last very long.
They’re used to some customers spending weeks, even months before they buy. Now it’s down to a matter of days. Davey Downs is one of the sales managers where it’s become less about selling and more about explaining what’s going on with new deliveries.
“We don’t say it’s going to be 30 days exact. It could be 30 days. It could be 25. It could be 40,” Downs said.
The big picture problem is getting the tiny microchips needed to build cars that get more advance every year. Every new car comes with thousands of these chips to function properly. Most of these chips come from overseas, and they’re having a tough time getting the supplies to make these chips in the first place.
When demand dried up for new cars during the pandemic, factories shut down around the world. As the economy rebounded, the factories making these chips couldn’t keep up.
Joy Dodson, head of marketing and operations with Chief Auto Group, called it a debilitating blow for the automotive industry.
“When we have a dealership that usually has 75-100 new cars on the lot and now, we’ve got five, it’s a huge difference,” Dodson said.
She said customers were now more willing to call and leave deposits for cars they’ve never seen in person. Consumer experts predict dealerships and shoppers could see a shortage of new vehicles well into 2022 before the market bounces back. Dodson said this hasn’t translated into higher prices for new cars on their lots but used car prices are up 30% in the US as of this past spring.
The trade-off is that trade-ins are more valuable than ever.
“We could give you a little bit more than say this time last year or this time five years ago, so your car is worth more,” Downs said.
Dodson said it’s the first time in her career she’s watched cars drive off the lot and immediately appreciate. She said it’s driving competition as we’ve rarely seen before.
“Every single dealership is going out of their way for customers to earn their business. We want to make sure we’re selling everything that comes to us,” Dodson said.
The shortage of parts has some experts predicting automakers to make 7.7 million fewer cars around the world.