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Why Is the Current Purchase Price of Cars, Trucks, and SUVs So High?

by | Aug 23, 2022

Why are Vehicles Getting More Expensive?

Buying a new car these days can be an expensive and complicated process.

In today’s auto market, the average price of a new car is much higher than it was just a few years ago.

This is because there are a number of factors that have influenced the market, including global events and changing consumer preferences.

One of the biggest reasons for the increase in vehicle prices is the global chip shortage.

This has been caused by several factors, including the closure of factories in China due to the COVID-19 pandemic.

The shortage has caused a ripple effect throughout the auto industry, as automakers have had to ration production due to the lack of available chips.

This has led to higher prices for both new and used vehicles and wait times for customers looking to purchase a new car.

The average new car price increased by about 4% last year.

This does not mean that cars have become 4% more intrinsically valuable; this is just some global or national financial black magic affecting us all.

What’s Happening to The New and Used Car Markets?

The effects of the global chip shortage are being felt throughout the automotive industry, with new and used car prices on the rise.

This is because chips are a vital part of many modern vehicles, and their scarcity has forced automakers to ration production.

As a result, customers looking to purchase a new car face higher prices and longer wait times.

The situation is even direr for those in the market for a used car, as prices have increased by 9% in the last year.

These trends are expected to continue in the coming months, as the chip shortage is not expected to ease up anytime soon.

What Does This Mean for Car Buyers?

For those in the market for a new or used vehicle, the current state of the automotive industry can be frustrating.

However, it is important to remember that these trends are temporary and that prices will eventually stabilize.

In the meantime, customers may want to consider alternative options, such as leasing a car or waiting for the market to improve.

One of the easiest ways to get a good deal on a new car today is to shop for cars online and consider making offers to private sellers.

While it may be difficult to find the perfect vehicle at an affordable price, remember that patience and persistence are key when shopping for a car in today’s market.

What Are Chips and How Are They Used in Cars?

Chips are a core component of electronic circuit boards that run nearly every aspect of modern cars.

These days engines, transmissions, differentials, lights, GPS units, climate control, and infotainment systems all run on chips.

The term chip originates from microchips or, in full, microprocessors, which are tiny integrated circuits that became popular in the 1970s thanks to their ability to reduce the size and weight of electronic devices while increasing their performance.

They are the “brains” of many devices, like computers, industrial robots, and of course cars.

In recent years, there has been an increase in demand for chips due to the availability of technology.

Even the most fiscally responsible micro-hatch-thing will include a color touchscreen with Bluetooth and controls on the steering wheel.

Just 15 years ago you had to spend $60,000 or more to get those features.

As a result, the current chip shortage has had a ripple effect throughout the automotive industry, causing production delays and higher prices for new and used vehicles.

The good news is that the chip shortage is expected to ease up in the coming months as new factories come online and production increases.

Can Dealerships Legally Upcharge for Faster Delivery?

If you hear your dealer say that for X-thousands or tens of thousands of dollars you can have your car today, and not in 6 months, you’re not alone.

This is called pre-ordering or dealer markup, and it’s a way for dealers to make some quick and easy money.

But is it legal?

The simple answer is yes, though the practice isn’t exactly popular with everyone.

Many states have laws prohibiting pre-ordering or dealer markup on new cars.

However, these laws only apply to the original purchase price of the vehicle and not to any additional fees charged for faster delivery.

As a result, dealerships are technically within their legal rights to charge customers a premium for immediate delivery of a new car.

SUVs and Trucks

Are the Most Popular Vehicles Today

It’s no secret that SUVs and trucks are more popular than ever before.

In fact, they make up nearly 60% of all new vehicle sales in the United States.

This trend is being driven by a combination of factors, including low gas prices, a strong economy, and an increasing desire for larger vehicles.

As a result, the prices of both new and used SUVs and trucks have been on the rise in recent years.

This means that with higher demand the availability of these large, utilitarian vehicles is even worse than the availability of sedans, coupes, and wagons.

Furthermore, the chip shortage has exacerbated the problem by causing production delays at factories that produce these larger vehicles.

If you’re in the market for an SUV or truck, be prepared to pay more than you would have just a few years ago.

How to Save Money When Buying a Car

Despite the challenges of today’s automotive market, there are still ways to save money when buying a car.

Here are a few tips:

– Shop around and compare prices before making a purchase.

– Look for manufacturer incentives and rebates.

– Take advantage of low interest financing rates.

– Consider purchasing a used vehicle instead of a new one.

With careful research and planning, you can still get a great deal on your next car purchase

Bottom Line

If you’re in the market for a new or used car, it’s important to stay informed about the latest trends in the automotive industry.

By understanding the reasons behind the current chip shortage and high prices, you can be better prepared to make a purchase that meets your needs and budget.

Remember, patience is key when shopping for a car in today’s market, and there are still ways to get a good deal on a new or used vehicle.

Happy car shopping!

About Protect My Car

Protect My Car is an extended auto warranty company. Our goal here at Protect My Car is to eliminate your worry of being financially responsible for an expensive mechanical breakdown. With our extended auto warranty, you don’t have to worry about being fully burdened with the cost of a covered repair.

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