Shortage of semi-conductor chips causes surge in price of used cars
JACKSON, Miss. (WLBT) - If you’re in the market for a new car you may have been waiting for quite a while. Those not wanting to wait are turning to pre-owned vehicles but running into sticker shock.
New cars are sitting on the lot and many are getting behind the wheel of a pre-owned car but paying much more than just a year ago.
“It’s kinda hard to find a good used vehicle now, and the prices have increase dramatically,” said Seam Curry.
The Columbus resident drove off the Watkins Auto Sales lot with a 2010 Honda CVR. He made the two-and-a-half-hour trip for what he said was the best price he found.
“I had a small car like this before. A few days ago it broke down on me,” said Curry. “So I got on the website, started looking and came up with this car here and I came down today to pick it up from Mr. Redd, and he told me he had it ready and waiting on me”.
The shortage in semi-conductor chips in new cars is prompting the rise in sales for used ones. Cars.com reports that the median price for a used car is nearly $24,000, up 34 percent since August 2020.
That is a more than $8,100.
“But in the last three to four weeks it’s gone back up a lot,” said Kerri Watkins.
She owns Watkins Auto Sales in Jackson and says the chip shortage is driving up used car prices over last year. She said in this tight market, down payments are now a must.
“We’ve seen a huge surge in the sales, but more importantly in the pricing of the used cars from last to this year. It’s about a 30 percent increase,” said Watkins. “A year ago, two years ago, you could go to the dealership and negotiate $500 or $1,000 off sticker. That’s not happening anymore. You know, what you see is what you’re going to pay.”
Watkins recommends that you purchase a service contract if the car is not under factory warranty. Gap insurance is also suggested in case the vehicle is totaled in an accident.
It will cover the difference between what insurance pays and what is owed on the car. Industry experts expect the prices for used vehicles to remain high for the next several months.
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