When it comes to car shopping these days, sticker price may mean sticker shock.
New and used car prices continue to spurt higher amid strong demand and tight inventory. While a manufacturing slowdown has improved slightly, there won’t be a return to normal anytime soon for car buyers.
“The typical dealership experience that consumers are familiar with — walking dealer lots with rows and rows of cars, negotiating over price and getting many incentives — is not likely to return this year because there are 4.5 [million] to 5 million consumers on the sidelines waiting for cars,” said Tyson Jominy, head of data and analytics for J.D. Power.
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“This pent-up demand will keep inventories low and prices high throughout most of 2022,” Jominy said.
An ongoing global shortage of microchips — key components needed for today’s autos to operate — that began in 2020 continues to slow down manufacturers’ production of new vehicles, which has translated into demand outpacing supply.
“It’s slightly better in the sense that there is no more drop-off of inventory — it’s not getting any worse,” said Ivan Drury, senior manager of insights for Edmunds.com. “But we’re still talking many months out until it starts looking more normal.”