Whether you’re looking to get cash for cars in Oakland, the wider California, or even the rest of the country, or if you’re looking to purchase a vehicle, the short answer to will cars be cheaper after COVID is no, not likely. With the COVID-19 pandemic slowly in decline, the U.S. and worldwide automotive markets are in short supply of vehicles, which can mean only one thing: higher prices.
While this is great if you’re looking to sell your used car in Oakland or anywhere else using cash for car companies such as Cash for Cars in Oakland, it means buying a new vehicle as of September 2021 is going to be pricy. There are lots of reasons, with the COVID-19 pandemic itself just one of them.
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COVID-19: Pent-up Demand
The U.S. is experiencing some of the largest automotive price hikes in the nation’s history. Prior to 2021, the previous largest used car price hike over a similar three-month period was only 12%, back in 1974.
“In June, used cars and trucks showed both the biggest year-over-year as well as month-over-month gain across all categories,” Nick Woolard, an analyst at TrueCar, explains. Prices of used cars have been soaring all year and reached a staggering 30% increase between March and June in the U.S., as shown by the Consumer Price Index.
Because of the COVID-19 pandemic, typical buying habits have died down over the past two years, with people not only reluctant to spend due to fear of their financial stability, but also specifically not buying cars because there is no need. With many jobs becoming remote as well as significant unemployment because of the pandemic, many have seen little need for a car.
As we emerge from COVID, demand for vehicles in 2021 has spiked massively as almost two years’ worth of pent-up buyers are now finally rushing to the market to purchase vehicles as they suddenly have more financial stability and jobs.
COVID-19 is not the only reason, however. The second, the more long-lasting reason is the shortage of cars in production. Microchip processors are vital for all modern vehicles as they are required to manage all the modern technology in our cars. From screens to window motors, air conditioning, and anything else that is electrically controlled, microchips run our cars.
During the past year the world has experienced a mass shortage of these chips, creating a bottleneck in the production of new cars as manufacturers scramble to get enough chips to fulfil production quotas.
The missing part in these microchips are the semiconductors, sometimes referred to as “the new oil” due to their high demand. The shortage of these semiconductors is so widespread because they are used in almost all modern technology, not just cars.
As a direct result of the semiconductor shortage, multiple car manufacturers and other tech retailers have had to curtail their production, with Nissan, for example, announcing that it would be producing 500,000 less vehicles than usual. General Motors has also had to interrupt elements of its pickup truck production due to lack of semiconductor chips, with thousands of their vehicles simply waiting for chips.
Unless the world can find a way to fix the semiconductor shortage, either through alternatives or finding new sources of the raw material required, it seems highly unlikely that cars will be cheaper to buy after COVID. TrueCar’s Nick Woolard says that “experts are expecting this to drag on to the fall,” which is great for sellers of used cars who can cash in using companies like Cash for Cars in Oakland. It is not so good for those looking to purchase.