The days when just about anyone with a steady income could wander onto an auto lot and snag a reliable late-model car or buy their kid’s first vehicle for a few thousand dollars have essentially vanished. “I’ve never seen anything remotely close to this — it’s craziness.”
More people are turning to auto auction companies like Sierra Auction in Phoenix because of a semiconductor shortage that has raised the price of used cars. FOX 10's Bailey Miller reports.A couple of months ago, a woman paid a visit to Jeff Schrier’s used car lot in Omaha, Nebraska. She was on a tight budget, she said, and was desperate for a vehicle to commute to work.″‘That’s what I get for $7,500? ’" he recalled her saying.
The days when just about anyone with a steady income could wander onto an auto lot and snag a reliable late-model car or buy their kid’s first vehicle for a few thousand dollars have essentially vanished. When a swifter-than-expected economic rebound boosted demand for vehicles, auto plants tried to restore full production. But chip makers couldn’t respond fast enough. And rental car companies and other fleet buyers, unable to acquire new vehicles, stopped off-loading older ones, thereby compounding the shortage of used vehicles.
Including taxes, fees, a 10% down payment, and an interest rate of around 7.5%, the average used vehicle now costs $520 a month, even when financed for the average of nearly six years, Edmunds calculated. Used vehicle prices are so high that Karl Hogan of Canonsburg, Pennsylvania, near Pittsburgh, was able last month to quickly sell his 2007 Toyota Tacoma small pickup truck, with more than 170,000 miles on it. Even with the vehicle’s age and mileage, a man from Ohio forked over $6,500 for it.
A used car delership is seen in Laurel, Maryland on May 27, 2021, as many car dealerships across the country are running low on new vehicles as a computer chip shortage has caused production at many vehicle manufactures to nearly stop. (Photo by JIMDavid Paris, a senior manager at J.D. Power, noted that used vehicle prices are directly tied to the cost of new ones.
Yet even after that, the availability of vehicles will be tight because traditional sources of used vehicles — autos turned in from leases and trade-ins or sold by rental companies — have essentially dried up.
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