How the pandemic is affecting the supply and demand for cars
Hundreds of new cars are waiting to be microchipped in for delivery to consumers, but with a shortage of microchips, these vehicles will not be going anywhere anytime soon. This creates a demand for used cars, and consumers pay the highest dollar to get one. You’d think the high demand and high vehicle prices would mean higher profit margins, but Matt Nimey, owner of Nimey’s New Generation Cars, says that’s not currently the case in this industry.
“Shipping has increased. The cost of the vehicle has increased. Purchase fees have increased because it is more difficult for auctions and companies to keep staff and staff on board, so costs have increased throughout the procurement process. “
The used car market is very competitive, and with demand this high, you are likely to pay the highest price for a vehicle.
“I think prices have reached a point where they may have reached the limit because a vehicle can only be worth that much money. It has to stop going up at some point, but I think we may have reached that point.”
Many traders rely on high volume sales to keep operating costs up, but the lack of inventory means that owners are finding new ways to do it.
“It’s hard to keep employees when you don’t have a lot of business. If you are a sales team of 20 and you used to sell 250-300 cars a month, you can now only make 15-20 cars a month, of which 20 make Sellers make a living? “
The problem isn’t just a lack of inventory. The profit margin of a used car is more competitive than ever, and servicing a used car is getting harder by the day.
“It’s a little harder to get parts. It’s a bit tougher for a lot of nuances in the auto industry, as are the small dealers … at this point, but if it gets harder I don’t know how many people want to stay in business. “