High New, Used Car Prices Keeping Pedal to Metal

As 2021 drew to a close, vehicle valuation and automotive research company Kelly Blue Book (KBB) released the startling stat that the “average used car price tops $27,000 for the first time,” noting that this base price is “a jaw-dropping 41% higher than in November of 2019, the last month before COVID-19 was first detected and knocked the world’s economy off its tracks.” 

KBB competitor Edmunds.com placed the average used car slightly higher at just over $29,000. 

Car shoppers — new or used — and those fixing wheels they already own should put some padding under their jaws because they will likely continue dropping throughout 2022. 

Among the hardest hit by COVID-19 lockdowns, microchip shortages and supply chain slowdowns, the automotive industry needs a lift, with inventories radically depleted and uncertainty ahead. 

There are essentially two schools of thought as to what happens over the next six months.  

Optimists believe

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Twin Cities car market battles empty lots, high prices, waits

Jim Palusky wasn’t planning on shopping for a car this fall, but then he got an offer he couldn’t refuse.

Walser Toyota in Bloomington said it would buy his 2019 Tacoma pickup for just $1,500 less than he paid for it, even though he’d driven it more than 30,000 miles in a year and a half.

“I couldn’t believe it was for real,” said Palusky, a retiree from Maple Lake who makes frequent trips to Duluth. “Everybody I talked to said I was crazy not to trade up.”

While other segments of the economy are still trying to recover from the pandemic, the auto market is reaching new heights. With manufacturers unable to ship enough new vehicles due to parts shortages, prices for new and used vehicles are skyrocketing. Some customers making trades are even getting more than they originally paid.

Walser Toyota is one of those dealerships scrambling for

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INDIANA IN-DEPTH: Chip shortage puts news, used vehicles in high demand | Across Indiana

Currently in the market for a new or used car? If so, be prepared for some sticker shock, at least for the foreseeable future.

According to the analysts at automotive resource company Edmunds, new car inventories have been strained for months due primarily to a combination of global semiconductor chip shortages and supply chain disruptions connected to the COVID-19 pandemic.

After digging into the potential impacts of those factors, the company recently reported that new vehicle inventory at dealerships nationwide was down by 48% this spring compared to a year ago, with inventories continuing to fall in the summer. And while the company does predict that new car inventories will begin to steadily rebuild beginning in September, the anticipation is that inventories will remain well below their pre-pandemic levels through 2022.

“New vehicles — particularly new trucks and SUVs — are basically the 2021 equivalent of toilet paper and

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High prices, few discounts and low inventory await car shoppers

Daniel Acker | Bloomberg | Getty Images

Car shoppers hoping to cash in on Memorial Day weekend sales events may want to rein in their expectations.

On top of reduced inventory due to a shortage of microchips — key parts needed for today’s autos to operate — and unrelenting consumer demand pushing prices higher, there are fewer incentives being offered by manufacturers and dealers.

The average incentive is $2,957, down from $4,825 in May 2020 and $3,878 in May 2019, according to a new forecast from J.D. Power and LMC Automotive.

“People will be in for a bit of a surprise,” said Ivan Drury, senior manager of insights at Edmunds.com. “There will be little to no negotiation on price.

“We’re seeing more people pay sticker price or above.”

At the start of the pandemic more than a year ago, when dealerships and manufacturing plants were shut down, chipmakers pivoted to

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