Price of cars – new or used – continues to drive upward
Katherine Mansfield/Observer-Reporter
Tyler Holt shares information about one of the few vehicles on site at Washington Honda. Holt said despite having difficulty getting inventory in, January has been steady for sales.
Katherine Mansfield/Observer-Reporter
Washington Honda employees Tyler Holt, right, and James Taylor discuss a vehicle on the lot.
Katherine Mansfield/Observer-Reporter
Washington Honda employees Tyler Holt, right, and James Taylor inspect a vehicle for sale on the lot.
Katherine Mansfield/Observer-Reporter
Tyler Holt, left, speaks with James Taylor and Katie Babirad about one of the vehicles for sale at Washington Honda.
Supply-chain challenges continue to fuel inflation, driving up prices of countless consumer commodities. Cars, appropriately, are among industries dealing with accelerating costs.
New and used.
A recent report in cbsnews.com said the average price of a used vehicle in the U.S. was $29,011 in November. That figure was courtesy of edmunds.com, and was a remarkable 39% higher than the previous November.
The website also noted that “for the first time anyone can recall, more than half of America’s households have less income than is considered necessary to buy the average-priced used vehicle.”
Shortly after that report appeared, an article in AAA East Central’s Motorist publication said the cost of operating a new car had risen to $9,666 a year. Depreciation, according to AAA, accounts for $3,900 of ownership expenses – about 40%. Fuel, maintenance, tires and loans are among the other expenses.
The agency added that the average price of a new car in 2021 was $32,903, an increase of $1,502 from 2020.
Cars today are better made and more durable, less likely to experience a fuel pump blowout, a flat tire or an overheated radiator than in days of yore. Getting 150,000 miles out of a vehicle is more commonplace than years ago, when a motorist typically was satisfied to have it for five years before trading it in.
Vehicles, however, are a lot more expensive now – new and used. And, for the time being, they are not as plentiful. This still-raging pandemic is causing delays in availability. Dealership lots that were once brimming with cars are now half-empty, or more. A shipment of cars or trucks could arrive, but many may have already been sold.
“The used-car market is very (expensive) for many reasons, the biggest being supply and demand,” said Gary Flannery, general manager of Washington Auto Mall, a grouping of three Washington Road dealerships near the city of Washington. “We had short supply this past year and large demand.
“A lot of people saved money in 2020 because they were stuck at home. People are getting back to going out, and that has contributed to driving prices of used cars up quite a bit.”
The Auto Mall sells new and used vehicles, as does Ford of Uniontown. David Coffman, one of the owners of the Ford location, said “an average of $29,000 for a used car is lot of money.”
He said prices have soared 25% to 40% since the pandemic began in Southwestern Pennsylvania 22 months ago.
A severe shortage of semiconductor chips also has wreaked havoc with the auto market. The chips are vital components of new cars and trucks. Most are imported, which limits the production of new vehicles and results in record-high used-car prices.
“Supply-and-demand and chip issues are having an effect across the board on new and used vehicles,” Coffman said. “I don’t know how long (this backlog) will last. I’m guessing a minimum of six months to a year, until we get chip issues settled.”
He said he is “seeing some improvement” in the supply of cars, “but the other side of it is many are being sold before they get here. That is eating up the allocation.”
Flannery likewise said, “We’re seeing a better flow of vehicles, and we’ll probably see lower prices. Production numbers are up and they’ll probably get to a normal level fairly soon. But there’s a backlog of orders for cars and we’ll see inventory levels go up slower than production.”
Operational costs for new cars did jump last year, by $105 per month, according to AAA. That, however, was less than half of the monthly increase of $279 experienced in 2020, when COVID-19 arrived here.
“One factor last year was fuel costs, which was no surprise,” said Jim Garrity, spokesman for the agency’s Pittsburgh office. “Gasoline was a dollar to a $1.50 more expensive than the previous year.”
Yet, despite higher expenses, he said new cars have numerous attributes and are made to last. “We are living in an era where vehicles are manufactured differently – even with gasoline consumption. You start to see demand having less of an effect at the pump because cars are more fuel-efficient.
“Full synthetic oil is better for an engine. Having that availability gives vehicle owners the opportunity to get longer lives out of their cars. That also reaffirms that people get oil changes as prescribed.”
Longer lives, indeed. More motorists are keeping their vehicles longer and treating them with more TLC. Coffman said a customer of his dealership traded in a car with 280,000 miles.
“The average age of cars on the road is higher than before,” Flannery said. “I think it’s 11 years old. I think about when we were kids. By the time a car had 70,000 or 80,000 miles, it was junk.”
Not anymore. Making a deal for a car is a big deal, though, and AAA advises customers to follow guidelines. They include:
- Deciding what makes budgetary sense, including trade-in value and down payment amount.
- Consider whether to finance or lease.
- Examine pricing options for new and slightly used vehicles.
- Test drive the exact model they want to purchase.
Yes, a vehicle purchase is an expensive endeavor these days. A customer in Omaha, Neb., found it to be shockingly expensive a few months ago, according to the cbsnews.com article.
A woman went to a used-car lot there, in urgent need of a car for work. She had a tight budget of $7,500, and was shown three cars priced at that level. All were older or had more mileage than she anticipated.
The customer selected a 2013 Toyota Scion with 160,000 miles on it. She got it thanks to the benevolence of the lot owner, who admitted he cut her a break – and did not make a profit from the deal.