Low Vehicle Inventories Lead to Rise in Prices, Analysts Say
As production begins to return to some automotive plants, the impact of the global semiconductor shortage on vehicle inventory has led to cost increases for consumers.
At the end of the year’s first quarter, Detroit’s automakers projected the global semiconductor shortage would have its biggest production impact midway through the second quarter. Now on the back end of that time frame, production is returning to some American auto plants.
One such plant is General Motors’ Lansing Grand River assembly complex. The company says production of the Chevrolet Camaro will return to that facility later this month.
“When you have strong sales and low inventories it means very high prices.” — Michelle Krebs, Auto Trader
Michelle Krebs is an automotive analyst for Auto Trader. She says the gradual re-opening of auto plants is a positive sign.
“Whether that will hold,” says Krebs, “I’m not sure. But what we certainly are seeing is continued depletion of the new vehicle inventory.”
According to Cox Automotive research, vehicle inventory is 43% lower than it was at this time last year, during the height of the COVID pandemic. Krebs says that’s why the average listing price for a new vehicle is currently more than $40,000 per unit.
“When you have strong sales and low inventories, it means very high prices,” Krebs explains, “And especially (when) we are seeing low incentives and not much discounting at the dealerships.”
Krebs says one of the vehicles with the lowest inventory is Chrysler’s Town and Country minivan. That vehicle is made at the automaker’s Windsor assembly plant, which has been under a production stoppage since March.
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