Toyota Honda Hyundai Ford Tesla you name it, everyone is raising the prices of their vehicles, both new and used. The average new car price hit a record $38,255 in May 2021, up 12% from the same period a year ago. Some popular cars are seen with unbelievable increases. The "Dealer adjustment" is usually the special discount at the dealership to lure customers in, but now it's showing a positive number. A local Toyota dealer was seen selling the 2021 RAV4 Prime with a "Dealer adjustment" of $9999. Tesla has been increasing the price on their Model Y by $500 every 2 weeks. Ridiculous?
Why are car prices rising? Simple supply and demand.
Lack of supply Computer chip shortage caused by the Covid slowdown at the factory and huge demand from everyone buying At-Home computers / devices.
Pent-up demand Everyone stayed home the last 2 years. Now everyone's going back to work, going to school, going on vacations, getting out. All the people that would've bought cars in the last 2 years are all rushing in at once. The amount of money handed out and low interest rates adds to the trouble.
CEO Elon Musk has recently explained that the price increases are due to "major supply chain price pressure industry-wide."
When will be the automobile prices be normal again? Many speculate the supply will catch up to the demand by the end of 2021. I spoke to my local car dealership which agreed by the end of the year. There are signs that price increases are starting to peak.
How do I take advantage of this situation? This is the first time in history that used cars have gone up in value. If you have any automobiles that you don't need sitting around, NOW would be a good time to sell them.