Auto sales declined in the spring, causing shipment volumes to become overflowing and cargo ships being forced to hold new vehicles at sea for weeks. Automakers like Ford Motor and General Motors shut down production lines because few sales were made and government shutdown orders were expected.
It looked like another automobile crisis.
But fast forward to August, where monthly vehicle sales were nearly 1.4 million – that's pre-pandemic sales in February and almost double vehicle sales of 745,353 in April. This is what you call a V-shaped recovery.
The recovery has been so rapid that new and used vehicles have jumped from oversupply to shortage – driving prices up. The average list price for new vehicles in August is $ 39,410, according to Edmunds.com, up from $ 807 from May. While the average price for used vehicles is $ 21,843 in August, it's up $ 920 from May.
"In the second quarter, every major automaker ceased production for the first time since World War II, creating inventory shortages that are still felt today," said Jared Allen, vice president of communications for the National Automobile Dealers Association for Fortune. “In addition, the lack of new vehicle inventories has drawn many buyers into the used vehicle market, where supply is also limited. The result is also a significant increase in the price of used vehicles. "
The combination of an improved economy and older Americans trying to avoid public transportation during the pandemic is driving sales at dealerships soaring. According to Wards Intelligence, inventories for new vehicles have dropped to an eight-year low.
When will auto production catch up again?
“We assume that this will only be temporary. Subject to unexpected delays in parts or downtimes of vehicle plants due to new COVID-19 outbreaks, we expect vehicle inventories to be near normal, ”says Allen. In addition to cars, the economy as a whole is confronted with widespread bottlenecks caused by production stoppages in spring and demand that rises again in summer. Everything from wood, coins, ammunition, beef to medical supplies is affected.
Bottlenecks could mean higher prices for consumers, but on the other hand it means a lot of business for manufacturers.
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