Experts recommend people to buy used vehicles rather than new ones to save on purchase price as well as bypass the high initial depreciation cost. Nevertheless, the domino effect of microchip shortage across the world has automatically pushed buyers towards the used-car market. The production of new vehicles are delayed because of a microchip shortage, so the demand for used trucks and pickups is sky-high. This has dramatically increased the prices of used cars. There is a fraction of the median price gap between a one-year used vehicle and its brand-new counterparts.
MotorCloud sells hundreds of vehicles to commercial buyers every year including insurance firms, construction contractors, and delivery companies.
How work truck shortage is affecting businesses?
Fleet operators are pushed at the bottom of the waiting list because automakers are allocating semiconductor microchips towards the high-end model, which betters their bottom lines. The pullback of commercial fleet sales has made fleet buyers and operators compete over scarce supply. Their budgets are stretched to buy pickups or SUVs that don’t fit the jobs.
Some businesses are averted from purchasing new pickups or trucks to replace old models due to inventory crunch. It has thus hindered their capacity to expand their business and fulfill the booming demand associated with home renovations, constructions, etc.
Home-cleaning businesses are unable to handle the on-site assessment demand due to vehicle scarcity. Even if auto sales have recovered to the pre-pandemic levels, but commercial vehicle sales recovery has lagged.
Commercial customers gain discounts than the sticker price as they buy in bulk but due to tight supply are paying more than the sticker price.
Due to lack of supply and increase in demand commercial vehicle buyers are turning to invest in used work trucks. Therefore, the prices of used trucks and pickups are also on a dramatic rise.
Used vs. new car prices
A one-year-old 2020 model has a median price of $36, 750, which is just below the 2021 new car model sold at $38, 817. The median listing price of a 1-year-old pre-owned car is 94.7% of the new car’s median price. The savings you can make in buying a used car is only 5.3%.
The inventory shortage becomes obvious when the overall situation is compared to vehicle rates two years ago. The median price for the 2018 one-year used model was $27, 595, while the 2019 new model was at $35, 839. It means the one-year-old 2018 car model had a median price of 77% of the new 2019 car. If you bought a used car two years ago then you could save 23%, which is significantly higher than the current savings i.e., 5.3%.
Is buying a used or new car a wise decision during an inventory shortage?
According to the new pricing trends, an average car shopper who would otherwise pick a used car will decide to buy a new vehicle. However, finding a new suitable vehicle in supply is a huge challenge. It is necessary to do some research like comparing used and new pricing as well as cross-shop for different brands.
Nevertheless, car owners wanting to sell their unused vehicle are lucky because inventory shortage at the dealership lots means they can negotiate top dollars.