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Concerns as consumers pay more for used cars over global chip shortage

A Used Car Market in Benin Republic

*The latest Manheim Market Report indicates that every type of vehicle saw price increases last month, and some others including vans posted the largest increase, a situation attributed to chip shortage and attendant declining car production capacity of automakers  

Emmanuel Akosile | ConsumerConnect

Consumers shopping for used cars, who encountered record high market prices September 2021, have expressed concerns over increasing prices of automobiles.

ConsumerConnect gathered the latest Manheim Market Report (MMR) said that increased car values increased each week throughout last month.

Three-year-old vehicles, typically the cars and trucks that are most in-demand, in certain markets, increased in value by 4.6 percent.

Shortage of computer chips hits automakers worldwide

Throughout the entire month, consumers paid more than the MMR values, report stated. Despite there being higher prices, 65 percent of shoppers ended up buying at least a vehicle, compared to 52 percent of them in 2019.

This publication reported that following the outbreak of the pandemic late 2019, the global shortage of computer chips has continued to force several automobile manufacturers to cut vehicle production volumes worldwide.

According to MMR, every type of vehicle saw price increases in September, but some increased more than others.

The report noted that the price of a van rose nearly 41 percent from September 2020.

Pickup trucks, already among the most expensive used vehicles, rose by another 17.8 percent. Overall, prices were up 27.1 percent.

Like many segments of the economy, supply chain issues have reduced automotive inventories and led to higher prices.

Recall since early in the Coronavirus (COVID-19) pandemic, there has been a shortage of new cars and trucks, mainly because of a shortage of computer chips. In recent months, supply chain bottlenecks have created shortages of other parts.

Used car market booms

Sequel to production of fewer new cars by automobile brands manufacturers globally, consumers in the market for a car or truck have turned to used car lots.

Analysts say rising demand for used cars and trucks has increased the price dealers can get.

The report further stated as prices were up, sales were down in the markets. Dealers may have got top Dollar for their inventory in September, but they sold fewer vehicles.

Cox Automotive, the parent company of Manheim, reports that total used vehicle sales were down 13% year-over-year on a seasonally adjusted basis (SAAR).

The company in a press statement, said: “We estimate the September used SAAR to be 36 million, down from 40.9 million last September and down compared to August’s 36.5 million SAAR.

“The September used retail SAAR estimate is 19.5 million, down from 21.7 million last year and flat month-over-month.”

Cox’s research suggests that consumers have been discouraged by an inability to find a new car and higher prices for used vehicles.

It says plans to purchase a vehicle in the next six months declined to the lowest level in eight months and was much lower than a year ago.

But for consumers who are able to find a new vehicle to their liking, there may have never been a better time to trade in a used car or truck, report added.

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