Top three contributing factors to the rising price of vehicles

The prices on vehicles, both new and used, continue to rise. New car prices have increased by as much as 15% since the end of last year and many people are even paying over sticker price to secure their next new vehicle. Additionally, folks in the market for a used vehicle are paying up to $10,000 more for those vehicle over the same time last year.

By now many of us know that the Covid pandemic played a role in impacting pricing all over the globe. From the cost of food to goods, cleaning supplies and everyday essentials, sticker shock seemed to set in everywhere we looked. But there are other reasons for the spike in vehicle pricing. Three factors rise to the top in the car selling industry.

1. Supply Chain Issues Continue – the COVID-19 pandemic has become known for monumental supply chain issues. Shutdowns and quarantines that began in 2020, at the onset of the pandemic, created some panic and an overall reduction in demand for vehicles. That drop caused automakers to forecast less demand for new cars and a reduction in overall sales. Parts orders, including those for microchips, were canceled or reduced, and workforces were laid off. The reduction in demand turned out to be temporary but automakers are still trying to catch up to pre-pandemic numbers. The industry is working to recover, a factor that is also driving up the cost of vehicles overall.
2. Microchip Shortages — there are a few reasons for the shortage that is hitting automakers. With continued and significant advances in technology over the years our vehicles are using more chips than ever before. From entertainment systems to safety and antitheft technology, our vehicles are full of high-tech items, all of which rely on semiconductor chips. This spike in use across the board has caused a steep increase in demand and contributed to the shortage.
3. Low Inventory – with the supply chain issues, microchip shortages, and the inability for manufactures to keep up with the demand of new vehicle sales, there is also a reduction in overall vehicle inventory — both new and used. That lack of availability in new vehicles also means that less people are willing to sell or trade in vehicles, which is also causing an extreme dip in the availability of used vehicles.

Many industry experts indicate higher prices are here for the long haul and we may never get back to 2019 pricing. Many also indicate the chip crisis is unlikely to repair itself until the year 2023 – at the earliest. If those projections remain true it would follow that the production of new vehicles will also continue to lag and it will take even more time before we see those numbers return to “normal” or a “new normal” in a post-pandemic era.

The Solution

Car dealerships have always been faced with challenges and they understand that consumer loyalty is a critical component in keeping up their bottom line. If you are a car dealership and you feel like you are facing an uphill battle, you are not alone. But no matter what challenges lie ahead, we can help with our industry-leading solution, DealersEdge.

Used by the automotive industry, this solution turns one-time buyers into loyal, repeat buyers. As a dealer, you know the sale of a vehicle will impact your bottom line and your dealership goals. One sale may may even garner end of the month incentives. But when a customer makes a purchase, and invests in a vehicle, it goes well behind a single transaction.

Attracting buyers to your service department for that first oil change (after they have purchased a vehicle) is one key to retaining them as loyal customers. But the time, coordination, and expertise involved in planning and executing a highly impactful program can be overwhelming and expensive. Our industry-leading, comprehensive service-customer attraction and retention solution, DealersEdge, is designed to attract vehicle buyers back to your dealership’s service department. Our customized premium and offer packages stand out in the mail and encourage buyers to schedule their first service visit within 90 days of their vehicle purchase.

Attracting Buyers

Our beautifully designed packages will surprise and delight your customers and are proven to increase first time service-visit rates.

Cut through the advertising clutter and attract buyers with:

• Branded dimensional mailers that stand out in the mail.
• A VIN-matched touch up paint pen or branded high-perceived value premiums that suit your brand and market.
• A personalized letter to the vehicle owner.
• Customized, redeemable offers on the vehicle owner’s first service visit.

DealersEdge will also assist in establishing positive goodwill toward your dealership, increase opportunities for additional engagement, and build consumer loyalty.

We are excited to collaborate with you to develop your industry-leading, customer retention and appreciate programs. Please contact us today for a free consultation at: 800.562.9733.