SAN DIEGO (KGTV) - If you're in themarket for a new car right now, our experts have some advice. Forget it, for now.
Supplies are down and prices are up, and it could be a long time before things settle down. How long? Business analysts are telling us if you want to make it in San Diego, be patient.
Normally this time of year we see those December to Remember commercials, with the shiny new vehicles in the driveway wrapped in a big red bow. Well, this December is not much of one to remember if you need a new car.
"The hardest thing to come across is literally that new car that you're looking for," says Ivan Drury with Edmunds. "We're seeing supplies down 80% from what dealers typically have."
If you know anything about economics then you know the rule of supply and demand. When there are fewer cars available and demand is high, you'll be paying more.
"Last month we were looking at something like $600 to $700 on average, over MSRP (Manufacturer Suggested Retail Price) and that spans to all vehicle types. We're talking sedans, crossovers, trucks, virtually everything," adds Drury.
So how did we get here? We'll you can thank COVID for that too. Most of the world's automakers went dark during 2020 with shutdowns and restrictions. But the real problem has to do with a lack of computer chips. Virtually every new car needs thousands of them.
"Cars a decade ago had maybe a few dozen microchips," says Robert Showghi who teaches Operations and Supply Chain Management at San Diego State's Fowler College of Business. "Smart cars today, electric vehicles, we're talking about 3,000 plus microchips."
Showghi is an expert on supply chain issues. So we asked him, where did all those coveted computer chips go? Well, the COVID shutdowns had something to do with it, yes. But you did too. When most of us were at home during 2020, not buying cars, we were buying other things that require lots of those same computer chips.
"Consumers, instead of spending for services started purchasing goods. Computers, laptops, TV's," adds Showghi
Some of those computer chips are waiting offshore with the supply chain issue which is a whole other problem. So how long will this last?
"Supply will catch up, but it will take probably until 2024 when there is going to be an equilibrium of demand and supply," says Showghi.
And if you think, 'Well, I’ll just buy a used car,' you might want to rethink that one too. Showghi tells us demand for cars is so high right now, prices for used cars are up 34%. If you can, the experts say be patient, and ride out the supply shortage. Things should get a little better in about 9 months.