Due to shortages of semiconductors and other components, automakers have been struggling to maintain production, and many are reducing their output. But the market for cars is hot, fueled in part through the general inflation. The average transaction price (ATP) of new vehicles in June was up 14.9% over a year ago, according to JD Power. (The average yearly increase had been between 1 and 4% for the past half-decade.) 2021 Q2 spending on new vehicles was up 28% from 2019 Q2, and profits to dealers have doubled year-on-year, to a new high of $3,908 per unit in June. Total monthly profits for new vehicle retail sales jumped an astonishing 175% from June 2019 to June 2021.
And it’s not just new cars. The Used Vehicle Value Index by Manheim, increased 36.4% year-over-year in June. Used cars with low mileage are even selling for more than the new model would be — if it were available. In June, 41% of new vehicles were sold within ten days of arriving at a dealership, up from 25% in June 2019. The supply of new vehicles is only 39 days at current sales rates, compared to a typical value of 60 days.
Some consumers, worried that prices will only continue to increase, seek to quickly use available cash to purchase a car, rather than paying more for it in a year’s time.
