Buyers just can’t catch a break, with rising costs and low inventory plaguing the industry, it’s becoming impossible to bring home a new car these days.
Automotive research firms J.D. Power and LMC Automotive say that sales of new cars in the USA are forecast to drop by 20.9% in May, compared to the same time last year. For the twelfth month in a row, new vehicle inventory remains below a million units according to CNN.
The sales drop represents an $8.3 billion decrease in new vehicle purchases from May 2021 down to $45.4 billion, even though the average transaction price for a new car is expected to reach $44,832, a 15.7% increase over the same month last year.
Multiple factors are contributing to the low stock and high prices, such as the global semiconductor shortage and the struggle to restart production lines amid the global pandemic.
Read More: Average Age Of Vehicles On U.S. Roads Rises To All-Time High At 12.2 Years Amidst Supply Shortages
Thomas King, president of the data and analytics division at J.D. Power, said “The industry sales pace is being dictated by how many units are delivered to retailers during the month, and demand far exceeds supply,” adding “Record transaction prices are the result.”
It’s not as though people aren’t willing to buy the vehicles either, demand is extremely high, automakers can’t keep up, and dealerships have significantly marked up any models that they have in stock as a result. While the news is bad for consumers, it’s not as devastating for dealerships, which have achieved record-high profits recently.
According to J.D. Power and LMC Automotive, the higher prices have more than offset the decline in sales. Prices should decrease by the second half of 2022 when most automakers are planning to ramp up production, but that doesn’t mean that they’re actually going, according to King.
