National used car shortage affects dealerships in the Grand Forks area
The consumer price index for used cars and trucks skyrocketed 40.5% between January 2021 and January 2022, according to new U.S. Bureau of Labor Statistics data.
GRAND FORKS — Used cars and trucks have become a hot commodity across the United States, and dealerships in the Grand Forks region have been coping with it through various methods as stock availability ebbs and flows.
The consumer price index for used cars and trucks skyrocketed 40.5% between January 2021 and January 2022, according to new U.S. Bureau of Labor Statistics data , meaning the average price for a used vehicle in the United States has increased 40.5% in the last year. Carfax’s data reflected nearly the same thing — a 40% increase in average used car prices from January 2021 to January 2022, with the average listed price being a highest-ever $28,000 .
But the takeoff for used car prices didn’t start in 2021; the beginning of the COVID-19 pandemic proved to be the tipping point. The lack of used car stock seemingly has come from a lack new cars, as well. Experts say a microchip shortage has caused new cars to become increasingly scarce, as many of them use the chips to control navigation systems and other electronic aspects of their makeup.
Morgan Hibma, director of marketing at Rydell Chevrolet, said the dealership began seeing changes in its inventory availability in the middle of 2020. Rydell has had to alter the way it approaches acquiring stock since the issues began, including buying used cars from people who are not buying a car from the dealership.
“At Rydell, we started buying more vehicles directly from the community than we ever have before,” Hibma said. “We made it a priority to let our community know about our Rydell Buys program, where we would buy a vehicle directly from a guest, even if they didn’t buy a vehicle from us. We are also paying top dollar for vehicles and trades.”
Those in the market for a new car can use the current situation to their advantage. Hibma said now is the best time for people to have a trade-in ready while shopping for cars, as they will likely receive top dollar.
“Buyers should always do their homework and inspect pricing very closely,” Hibma said. “We have made the conscious decision to not charge over MSRP on any new vehicle. There are many dealerships across the country that are currently charging over MSRP right now.”
So, has Rydell lost sales because of a lack of inventory in the past two years? Yes, but Hibma asserts inventory availability has always been a factor in closing sales.
“Our guests are typically looking for something specific,” Hibma said. “The great news is we have been able to order vehicles that our guests are looking for, so they are able to get what they want in their next new vehicle.”
Grand Forks Subaru has run into issues with stock affecting sales, as well. Chad Vacura, sales manager at the dealership, said it has been unable to close sales in the past due to not having the inventory a customer wanted. However, he said there are also ways of salvaging sales when a lack of inventory gets in the way.
"We do a good job on order-outs,” Vacura said. “We order the car for them, and the good thing is most people know what's going on in this market in the automotive world. They know what's going on, and they're pretty patient.”
Vacura said stock issues aren’t too bad right now compared to when the used car market “started to go crazy” for the dealership last June. It, like Rydell, is also accepting trade-ins in cases where customers aren't buying a car off the lot.
Grand Forks Subaru currently has no new cars on the lot not already allotted to a customer via order-out.
“We have a pipeline of cars that are coming in, and we sell out of that pipeline,” Vacura said. “So I mean, you look at our lot, and yeah, we don't have new cars sitting all over the lot like we used to have. But we still have a good amount of cars that come in, so when a truckload (of cars) comes in, they're all pre-sold.”
So, even with things cooling off for Grand Forks Subaru since last June, is there an end in sight for the stock shortage?
“No,” Vacura said.