After almost three decades of record-low new-car prices, buyers are slowly coming to terms with paying top dollar and waiting weeks or months to take delivery of their new vehicle due to stock shortages and delays caused by the global semiconductor crisis.
A study by a US automotive industry analyst firm claims new-car buyers struggled with the long lead times at first, but are slowly getting used to paying full retail prices and dealing with limited vehicle supply.
Industry insiders believe current stock shortages will last for the remainder of this year, and we may not see a return to sharp discounting until next year.
In Australia, some customers have cancelled orders in frustration because they don’t want to wait months to take delivery of a new car, but the majority are now prepared to wait, say dealer sources.
“Shoppers are expecting high prices and limited choices, and that’s exactly what they are finding,” said Vanessa Ton, a senior industry intelligence manager for analyst firm Kelley Blue Book in the US.
“The global shortage of microchips is one of the top stories right now in the automobile business, and if you are a consumer looking for a new vehicle, you don’t have to search hard to see the reports,” she said.
In the US, last month was the strongest April since 1976. In Australia, last month was the highest April on record.
The Australian Automotive Dealer Association (AADA) says there has been a seismic shift in consumer behaviour in the past six months, as many Australians are buying a new car rather than going on an overseas holiday, due to international travel restrictions caused by the coronavirus crisis.
After three decades of record low prices and new-car affordability – and a decade of dealers being overstocked with inventory – the tables have turned, and there are now more buyers than there are new cars to deliver.
“There is a clearly a situation in which demand is outweighing supply and the level of discounting is not what it has been in previous years,” said James Voortman, the chief executive officer of the AADA.
However, the AADA said, new car prices in Australia had risen “well below inflation” for the better part of three decades.
The AADA says although discounting is not as strong as it has been in recent years, new-car buyers are “still benefitting from a favourable borrowing environment (low interest rates) and there are still deals to be done”.
The car industry says it is also frustrated by the delay in new car deliveries caused by manufacturing interruptions due to the global semiconductor shortage.
“While consumers are being asked to wait longer for their new cars, this is a global issue which has affected other industries too,” said Mr Voortman.
“We are as frustrated as our customers about the delays,” he said. “However, anecdotally, talking to our dealers, they say customers are becoming increasingly aware and understanding of the delays.”
Mr Voortman said that while customers may not see the level of discounting they have seen in previous years when the industry was overstocked with new cars, “availability is changing every day and dealers are doing their best to find cars and fill orders.”
MORE: Record new-car sales in April 2021
MORE: Semiconductor shortage news stories
MORE: BMW and Mercedes remove safety tech due to semiconductor shortage
MORE: Toyota RAV4 Hybrid waiting list grows again
MORE: Peugeot swaps digital for analogue speedo during chip shortage
MORE: All our coronavirus coverage in one click