After a year of record prices and fewer choices, the new car market is far from pumping the brakes in 2022.
Not only are dealerships facing record inventory, but their customers are waiting six to nine months to get behind the wheel of their expensive new vehicle.
“They have no choice. They have to wait,” Route 10 Lexus owner Tomas Maoli told FOX Business’ Lydia Hu on Thursday. “Most of the cars we sell haven’t even been delivered to the dealership yet.”
The average transaction price for new vehicles is expected to reach a record high in December, according to J.D. Powerof $45,743, the first time above $45,000 and 20% higher than the previous year.
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“They pay between $5 and $10,000 more than the MSRP because they need a vehicle,” Maoli explained. “It’s part of their lifestyle, isn’t it? And they need it, and so they pay for it.”
New car dealerships have barely a third of the normal number of car units – around 2 to 2.5 million, according to JD Power data.
As soaring car prices and growing inflation concerns push some buyers out of their budget comfort zones, semiconductor makers have been largely hampered by the pandemic.
Chip orders were canceled when automakers temporarily closed factories at the height of the pandemic. On top of that, the demand for chips grew at the same time in other industries because people were staying home and needing extra electronics for work and entertainment. The surge in demand for microchips began when automakers restarted production, leaving chipmakers unable to keep up.
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Maoli said he doesn’t think car prices will slow until 2023. It comes as Biden accuses Republicans of wanting people to be too poor to afford cars.
President’s proposal solving the problem requires “increasing the supply of cars by making more,” but global supply chain backlogs continue to hamper chip and auto production.
The Associated Press contributed to this report.