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Consumers navigating an expensive and challenging car buying market

New vehicle inventory low, many consumers forced into used-car market
Consumers navigating an expensive and challenging car buying market
Posted at 5:00 AM, May 26, 2022
and last updated 2022-05-26 07:00:30-04

COLORADO SPRINGS — Whether you're buying a new or used car the experts say the market is still very expensive, selection is limited, and vehicle inventory is an ongoing challenge. So, what if you’re needing to buy a car soon?

For more than a year now, automakers have been battling through a microchip shortage that has sporadically delayed the production of new vehicles causing record low inventories, higher prices, and pushing many consumers into the used car market.

”We’ve been in this drought of new cars and really late model used cars for a few months now,” said Colorado Auto Dealers Association CEO Tim Jackson. ”They all are predicting that we are 2023 and maybe even 2024 before supply chains open up enough that inventory builds.”

The supply of vehicles is directly tied to ongoing problems overseas in producing enough microchips to power features on new vehicles.

”For the Asians to be able to produce the microchip they have to have the neon. The neon is sourced out of Ukraine and that source is dried up obviously,” said Jackson.

The good news is prices are starting to finally trend down after a record highs set in January, it has experts hopeful that the worst of the price hikes may finally be behind us.

Trends show vehicles are depreciating again and in some cases prices are dropping. Wholesale vehicle prices have dropped 6.4% since the January record, but prices are still extremely high, and the index remains up 14% from a year ago.

“For the next year to two years at least we’re going to be in a situation where the best way to buy a new car is to order it online, or order it through the dealer,” said Jackson.

If that’s not an option and you’re in the market for a used car, consumer advocates say you should keep these things in mind…

  • Cars that are only a year or two old may cost the same as they did when they were new. That’s why the better values may be in vehicles that are three to five years old. 
  • Right now, the older models you might not normally consider might be most helpful for your budget goals. 
  • A word of caution: In this market, try not to get stuck with something that’s going to be worth less than the amount you owe on the loan in a few years. 

”Being upside down in the future, and that is a very real risk, but it’s mostly on those late model used,” said Jackson. “So, if you overpaid for a car whether it’s new or used, if you overpay for a car today you might take a hit on that car tomorrow or next month or next year when you’re ready to sell it.”

News5 is told by the Colorado Auto Dealers Association the typical wait time on buying a new vehicle right now is three to six months and if you’re looking at a used car, remember to check the car’s history to make sure you know exactly what you're getting in this pricey market.

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