Prices for new and used cars are soaring as the COVID-19 pandemic skews supply and demand
- Demand is outpacing supply of new and used cars after the initial COVID-19 crisis in the US, according to Axios.
- Manufacturing stoppages have reduced the number of new cars available on dealer lots, leaving buyers with fewer options.
- Average prices for both new and used cars have gone up.
If you're looking to buy a car right now, the market is not in your favor, according to Axios.
The COVID-19 pandemic has upset traditional supply and demand between used cars and new cars, the outlet wrote. Prices are now higher because supply has dried up, while demand didn't stay low after the first months the virus affected the United States.
By about mid-March, almost every major carmaker ceased production in their factories in attempts to slow the virus' spread. Honda was the first to close its factories in the US because of the outbreak. Fewer near cars ended up on dealer lots because of this manufacturing stoppage — in particular, Axios pointed out, pickup trucks and SUVs.
At the same time, consumer demand for cars didn't stay down as expected after the initial COVID-19 crisis.
People living in urban areas found themselves becoming first-time car shoppers because they were unwilling to risk exposure by taking public transportation. Dealerships, adapting to the new reality, made virtual and online car buying much easier.
"Federal stimulus checks, plus the extra $600 monthly unemployment benefits, helped grease the market, though both programs are over now," Axios reported. "Big incentives, including longer loans, helped put car payments within reach for many."
All of this means more profit for dealerships, according to Axios. Citing data from Cox Automotive, Axios reported that the average price on a new car is up about $400 since January, averaging at $38,414. Prices for used cars are up $900, averaging at $20,445.
"At wholesale used-car auctions, dealers are fighting over scarce inventory, bidding up prices," Axios wrote, "which of course get passed on to consumers looking for a good, affordable, late-model used car."