The semiconductor chip shortage, aided by a number of other supply chain issues related to the COVID-19 pandemic, have impacted automotive production severely in recent months, as Ford Authority has reported on extensively. Coupled with increased demand, this has led to higher new and used vehicle prices, plummeting inventories, and a lack of incentives. But it seems that this trend may soon begin to cool off, according to the latest data from Edmunds.
That relief won’t be coming just yet, however, as used vehicle prices are expected to once again reach new record highs in Q2 once the final data is calculated. Average transaction prices in the used vehicle market grew from $20,942 in Q2 2020 and $22,977 in Q1 2021 to $25,410 in Q2, which is the highest ever recorded.
However, there are signs that used vehicle prices are beginning to level off after their record run. Edmunds points to average new-vehicle transaction prices as proof of that – after growing to $40,070 in Q1, new vehicle ATP didn’t increase by much in Q2, hitting just $40,827. Much of this can be attributed to the fact that dealers are simply running out of inventory, particularly more expensive SUVs and pickups.
Though recent studies have shown that the majority of car shoppers don’t mind paying these inflated prices, Edmunds suggests waiting to buy a used or new vehicle if possible. And if shoppers must purchase a vehicle now, they can at least take advantage of record-high trade-in values.
“In these unique market conditions, car shoppers must remember that they have the most negotiating power through their current vehicle,” said Ivan Drury, Edmunds’ senior manager of insights. “Although it’s important to do your research on available incentives, getting competitive quotes for your trade-in will be the smartest way to guarantee the biggest discount on your next vehicle.”