A study conducted in the last week of April found that most car shoppers have heard about the semiconductor chip shortage and are aware that it is affecting vehicle production, supply, and thus prices.
Forty percent say they’re willing to pay 12 percent over MSRP for a new car. Given average new-car prices, that means $5000.
Over a third of shoppers looking now say they’d wait to buy, given the high prices, and a quarter of those people say they'll buy used instead.
You already know this, but we'll say it again: car prices are climbing. A report in April showed prices were around 4 percent higher than a year before, and we've beat that news drum repeatedly in the past month. It turns out that people seem to understand that there's no way around it if you want to buy a new car today.
Cox Automotive released a study this week showing just how receptive buyers are to higher prices. Forty percent, Cox found, would not shy away from being charged a 12 percent premium. Given that the average new-car MSRP in the U.S. is almost $42,000, that means four in 10 people would accept a price that’s $5000 more than what the sticker says.
Despite the higher expected prices, only 37 percent said they’d wait to buy a vehicle, with 70 percent of those saying they’ll wait at least three months to purchase and 23 percent saying they’ll look at used vehicles, instead.
Cox Automotive spokesman Mark Schirmer told Car and Driver: "The current auto market, with low inventory and high demand, is anything but normal. And we know it's driving people away."
Cox’s research shows that 87 percent of consumers recognize the issue is impacting both domestic and import nameplates. As the issue is industry-wide, 73 percent of consumers are expecting to face higher prices at the dealerships, and nearly 60 percent believe they will find lower incentives. One main reason for this non-sticker shock is the limited supply times that we’re all living in. Cox's survey was conducts in the last week of April, and found that 75 percent of car shoppers knew about the global semiconductor chip shortage and that it was wrecking havoc on new car production. Almost as many, 73 percent, said they expected to see higher prices at the dealership, and almost 60 percent said they expected that any incentives they might find would be lower than before.
Cox's Schirmer also says, however, that "Our recent research shows nearly 40 percent of buyers who were considered 'in market' for a vehicle are now dropping out or deciding to delay their purchase. High prices and limited selection are likely the cause." And does this sound like anyone you know? "For the most part, car buying in America continues to be driven by the deal," he said, noting that even under current conditions, "Older shoppers—and specifically older male shoppers—[are] less willing to pay over sticker. These older buyers are a cohort we call 'Straight Shooters,' and they are experienced vehicle buyers, with plenty of good deals in their past. Paying above sticker is an unnatural act for this group."
Just over a million and a half vehicles were sold in the U.S. in April. According to iSeeCars, the fastest-selling cars in the U.S. last month were the Chevrolet Corvette (average price $87,390), the Jeep Wrangler 4xe ($57,161), and the Kia Telluride ($44,723). Fastest-selling means these vehicles spent the shortest time waiting on dealer lots for someone to take them home. In total, 16 models were sold in an average of under 20 days, while the overall average for the entire market was 48.3 days.
At the end of April, there were less than 2 million new vehicles on dealership lots in the U.S., which was 42 percent lower than April 2020. Cox said it believes supply will continue to be low until at least the end of the year.
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