Americans may be growing accustomed to higher car prices. A new study shows that most new car shoppers are aware that prices have increased throughout 2021. But fewer said they will wait out higher prices now than in a similar study over the summer.
Cox Automotive has kept an ongoing COVID-19 Consumer Impact Study going since March 2020. October’s results are out, and they show that just 49% of respondents indicated they were “extremely” or “very” concerned about COVID-19. That’s the lowest level since the studies began. But the survey results show other changing market conditions.
Cox Automotive is the parent company of Kelley Blue Book.
It’s a Seller’s Market, But Buyers are In
New car prices have been soaring throughout 2021. At the end of October, the average new car in America sold for $46,036 – an increase of $5,266 over one year before.
Prices have been increasing due to factors such as a global microchip shortage. The average new car contains more than 100 tiny microprocessors, controlling everything from engine timing to smartphone connections. Manufacturers have slowed or paused production of many models this year as they have struggled to find the microchips they need. That has pushed prices up.
New car shoppers are aware of the news. Fifty-six percent of survey respondents said they were aware of the new car price spike.
Yet just 16% of those considering a new car planned to delay their purchase. That’s a significant drop from a late August survey when 48% of new car shoppers said they would attempt to wait out higher prices.
Among those who intend to buy a new car now, 66% believed they would have to wait up to 12 months to get the best deal on a new vehicle. But fewer were willing to wait.
Automakers May Keep Inventories Low
The news could mean that Americans believe higher prices are here to stay.
They may be right. In May, General Motors’ CEO told reporters that America’s largest automaker would “never go back” to pre-pandemic inventory levels.
They’re not the only ones. In September, BMW’s chief financial officer said the company would also keep inventory low “to keep our pricing power at the current level.” Mercedes-Benz’s CFO similarly said, “we will consciously undersupply demand level.”
Ford, meanwhile, has said it plans to move toward a build-to-order model where dealers keep fewer cars in stock and most buyers custom-order the vehicle they want.
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November 29, 2021 at 11:46PM
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Car Shoppers Know Prices Are High; Only 16% Will Delay Purchase - Kelley Blue Book
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