Car prices rise as supply shortage continues

MEMPHIS, Tenn. (WMC) – Buying a car has become much more expensive. The price increase starts long before the cars hit the field.

It all goes back to a microchip shortage that started two years ago. Today, production has slowed even further due to supply chain issues that began in fall 2021.

This affects all corners of the market, including repairs.

“We could order these parts. In less than an hour they were in our store and we could install them. Now we are waiting for parts sometimes two days that we used to have in two hours,” said John Ferrante, the owner of Christian Brothers Automotive in Southaven.

According to the US Bureau of Labor Statistics, car prices are up about 12% year over year.

Understandably, consumers are turning to used cars instead to save money, but Ferrante says that may not be the ideal solution either.

“They only have options to fix what they have or buy something used. Well, used cars are up 40%,” Ferrante said.

While auto repair costs are rising right now, he says you’re still likely to save more money compared to what you’d spend buying a used car.

“I’ve seen people spend up to $6,000 to $8,000 fixing a vehicle that I would never have recommended they fix, but it’s their most cost-effective solution now,” Ferrante said.

Ferrante doesn’t expect the shortages to end soon, one reason being the fact that the overwhelming majority of automotive microchips are made in Taiwan, China and South Korea.

“There are a lot of chipmakers trying to make chips in the United States,” Ferrante said, “I think you’ll see a lot more.”

He expects the shortages to continue for at least a year.

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