With disruptions from the COVID pandemic causing shortages of computer chips, new vehicles are pricey and scarce, pushing many buyers toward used cars, which is driving up prices for those, too.
Gokcen and Yasin Ceran have a teenage son who just started driving, so the Morgan Hill couple spent Thursday in the South Bay looking to buy a car — amid record prices for new and used vehicles.
“In over 22 years in this business, I’ve never seen anything like this,” said Dmitriy Shamilov, senior sales manager at Envision Honda in Milpitas. “We usually have more than 700 new cars on this lot and now I have less than 10.” Auto-industry analyst Ivan Drury said vehicle buyers make purchases when they need to, even if prices or financing costs are higher, and in the Bay Area, where environmental consciousness and incomes are relatively high, many consumers favor smaller cars, electric vehicles and luxury brands. “The Bay Area is not immune to gas prices, either,” Drury added.
Because of the chip shortage, dealers are selling some new vehicles without chips for certain functions, such as heated seats or driver assistance. Customers can at least get a vehicle, and come back later for the chips. Would-be new-car buyers are doing more “cross-shopping” among automakers, their brand loyalty withering in the face of sky-high costs, Block said. Some look at new-vehicle scarcity and sticker prices and decide, “I’ll just go and grab a pre-owned vehicle,” Block said. That shift has launched a desperate scramble among dealers for used cars to fill out the asphalt expanses once bursting with new vehicles. “We’ve had to switch focus,” Block said.
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