WKYT Investigates: Rising rates of used car sales
LEXINGTON, Ky. (WKYT) - The auto industry is facing some unique challenges.
A shortage of microchips is slowing new car production and fueling used car sales. Now, dealers across the Commonwealth are struggling with high demand and low supply.
“We’ve been slammed,” describes Shannon Jones.
Jones works for Don Franklin Auto Mall on Richmond Road in Lexington.
“Our buying center typically buys about 40 cars a month. In 2018 we bought 184 the whole year. We’ve bought 200 in the last 90 days. People just physically selling their vehicles on top of just trading them in. Values are higher than ever right now.”
“Consumer spending patterns have changed. With the pandemic there was a significant increase in demand for laptops and consumer electronics which use computer chips just like automobiles do,” explains UK Associate Professor of Economics, Dr. Michael Clark. “As that happened, that created a shortage particularly for chips needed for new cars. So, you have manufacturers in a situation where they’re missing a key component of the automobile so there’s not able to produce as many cars.”
Dr. Clark says prices for new cars have increased by about 6% compared to this time last year. For used cars, the increase was about 42%.
Jones is paying people more for their used cars now than he ever could pre-pandemic. He’s also seeing more customers consider pre-owned vehicles, since the new take longer to get on the lot. He’s normally got 700 new vehicles on the lot. The day we talked to him, there was less than 80.
Copyright 2021 WKYT. All rights reserved.