Buying a car has never been so stressful. Right now, both used and new cars are in such short supply that finding the vehicle you want with the options you need is inordinately hard. What caused this, and what can we expect from it as we shop for new or used cars?
The automotive supply chain malfunction
Auto suppliers are in deep trouble, and it’s common knowledge at this point that the classical economic high demand, low supply problem is backlash from the pandemic. That being said, what exactly caused car manufacturers to be unable to provide the needed vehicles to buyers? The toilet paper shortage was way more obvious. A high value item like a car isn’t going to cause cash-strapped quarantiners to go nuts at the dealerships. And since we’re comparing cars to toilet paper, let’s look at the complexity of the automotive industry before we wipe our butts with cash buying a vehicle at a time of inflation and car shortage.
Building a car
To oversimplify the situation, building a car for a manufacturer breaks down similarly to the diagnostic for a repair you get at a body shop or a dealership. Parts, and labor. Let’s go into the parts: auto suppliers are having a hard time getting consistent materials, and the prices are varying drastically. The ripple effect of factory shutdowns means that bulk inventory was not created to prepare for the manufacturing needs of the OEMs. Among those are: steel, rubber, aluminum, thermoplastic resins. These are the basic materials needed for the vast majority of car parts. Add into that the fact that automotive manufacturers completely stopped keeping inventory due to the supply chain being so ready to provide these pieces to the giant puzzle of a car, and you have a perfect storm of low supply, high demand. I’m sure there’s a graph somewhere from high school economics that would apply here, but the concept is pretty familiar.
The crisis ripple effect
One thing we can take from the toilet paper situation we all dealt with is the actions of the few affecting the needs of the many. Like many consumers, once manufacturers recognized the crisis, many began stockpiling inventory in the hopes of being able to meet the demand, therefore ordering more than needed. While this was irritating on a consumer basis (a person buying bulk toilet paper isn’t going to need to sell it - they are stockpiling it for a perceived need that enhances the supply problem in the short term and just leaves them with an excess of toilet paper for mice and roaches to chew on in a dusty basement), on the manufacturer level it makes sense. However, it does increase the demand for those raw materials when any actor orders more bulk than previously ordered, causing manufacturers that are slower to the game to starve, so to speak.
Additionally, there are massive labor shortages amongst raw material manufacturers. There aren’t enough employees to meet the needs, and the new needs of the OEMs, so as these problems stack due to previous layoffs and lowered need for materials, the exponentiate as demand increases far beyond what it was previously.
How long will this last?
If you can hold out until mid 2022, there’s a decent chance this massive shortage of vehicles will subside and pricing will become more reasonable. That being said, if your car breaks, the demand for used vehicles is very high as well. This makes getting value for a trade-in much more likely, as dealerships would like to have anything on the lot. You may have to make sacrifices in cosmetic features like color, options, etc, but ultimately you will be able to get a better deal than you might think, so the last thing you want to do is take your used car to the junk yard.
Getting new tags or transferring tags for your vehicle
If you are buying or selling a car, want to transfer the title or get a new tag, Auto Tags of Florida is a courier service that will happily free you from the crowds at the DMV. Contact us today for quick service and delivery of your tags, registration renewals, Fort Lauderdale title transfers, and more.
Reference material:
Forbes
NY Times
Photo credit:
Anthony Shkraba
