Auto Industry Reckoning… New Car Shoppers To Drive Pre-Owned
Amid the pandemic and economic chaos, demand for dominant high margin big pickups and SUVs stayed strong and steady.
Without acres of new cars waiting for buyers, dealers were still selling and getting premium prices, even eliminating inventory financing expenses, further driving down their cost of sale.
Despite high prices, consumers bought up everything and even finally caught EV fever, with up to 30% of new car buyers shopping for all electrics.
Despite supply chain disruptions and chip shortages, auto makers could produce fewer cars and make more money. Car dealers could sell fewer cars and make more money, and consumers just chalked the 30% price surge up to rampant inflation.
Cue the economic concept of “Demand Destruction” … as price increases freeze buyers out of the market. And then the double whammy … now that the auto industry’s trillion dollar “All Electric” gambit is actually starting to show promise … auto makers must confess that today they can’t possibly meet a sudden demand surge for EVs.
The same way new home buyers fear they are being priced out of the housing market… new car buyers will feel the squeeze.