Used car prices rising as new vehicles in short supply

POCATELLO, Idaho (KIFI) - Car dealerships in the area are having a hard time keeping their new vehicle inventory stocked, so buyers are turning to used cars instead.

"If you’ve been driving around town, you’ve noticed the lots are thin on inventory. Mainly, that’s due to the shortage of new cars,” said Brian Johnston, general sales manager for Phil Meader Subaru on Yellowstone Ave.

New cars need hundreds of semiconductor chips, which are in short supply globally. The shortage is expected to cost the auto industry $110 billion in revenue in 2021, according to consulting firm AlixPartners.

Phil Meader Subaru typically has 45-50 new cars on the lot, Johnston said. On Monday, they had only 12 for buyers to pick from.

With few options for new cars, buyers are picking used ones instead, which is driving up the price for old cars.

“Your trade in is worth quite a bit more than it would have been," Johnston said.

But the short supply and high prices aren't deterring people from upgrading their vehicle.

“Last month was pretty unreal. We had record numbers and sold down to almost no cars. Even our used cars were almost depleted,” Johnston said.

AlixPartners expects the chip supply chain to slowly open back up throughout the rest of the year, and into 2022.

“They’re getting production ramped up. We do have cars in the pipeline, but it’s just going to take time,” Johnston said.