Car prices continue to rise amid high demand and low inventory

Inflation has driven up prices of used and new vehicles. It’s a new blow to an industry already navigating historic demand, low inventory and supply chain issues

YORK COUNTY, Pa. — The COVID-19 pandemic created unprecedented backlogs in the automotive industry. Although shutdowns are long gone, the problems left behind have only grown.

“Definitely in my 37 years of being in the business, this is probably only the second time I’ve seen something like this,” said Tom Couch, vice president of operations for Jack Giambalvo Family of Dealerships. “That just made much more demand than there was supply, so that’s what’s been affecting us to today, too.”

Dealerships can’t keep cars on the lot, and thanks to supply chain holdups with computer chips and other parts, getting them there in the first place remains a challenge.

The situation is causing higher prices for both used and new vehicles.

“We’ve seen a huge increase in used car prices [and] lack of availability of new cars, so it’s definitely changed the way we’ve done business,” said Wayne Staib, sales manager at Lehman Volvo.

Demand for electric vehicles is also soaring, and dealers only expect that to continue.

“Tesla has really motivated car companies to change their portfolios from gas engines to electric, and certainly with gas prices rising that’s a concern too,” said Staib.

Lehman Volvo and Jack Giambalvo Hyundai, both located in York County, say they haven’t gone above the manufacturer-suggested retail prices for new cars since staying fair to consumers is their top priority.

“If there’s any additional equipment a customer wants, they’ll pay for it over and above that,” explained Couch. “But at this point that’s all we’re going to charge, and that’s the fair price.”

However, dealers say used cars are tougher because those prices are market-driven. The average price of a used car has risen 40% in just the last year, according to industry experts.

The good news is that those trading in a vehicle will receive a bigger return. 

“That’s certainly a motivator for a lot of consumers,” said Staib. “They know their trade value is worth more. The challenge is finding them the right car to replace it with.”

Dealers say there’s no crystal ball but predict consumers could see industry loosen up toward the end of this year.

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