Local used car prices skyrocket as automakers suffer from computer chip shortage

KOLD News 5-5:30 p.m. recurring
Updated: May. 12, 2021 at 9:13 PM MST
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TUCSON, Ariz. (KOLD News 13) - The price of used cars is skyrocketing as automakers, suffering from the global shortage of computer chips, are cutting production. Many new car dealers are buying used cars to fill their lots. Used car dealers in Tucson have noticed prices on used trucks rise exceptionally high.

“Trucks, you can’t even touch them right now because they’re bringing retail and some of them are bringing over retail where the dealerships are having to pay that,” said Rick Peterson, a used car dealership manager in Tucson.

Used car dealers are now competing with new car dealers to purchase inventory at car auctions.

“The new car dealerships are buying used trucks at an inflated price and dragging us up with them,” said Stuart Tawney, a used car dealership general manager.

He said trucks he would typically sell for $20,000 are sold for $30,000 due to the lack of inventory. Used car dealerships like his aren’t making any extra profit but simply making up for an increased cost of inventory. Economics experts say the pandemic slowed car sales and now people are buying again. The chip shortage has only added to the issue.

“The combination of supply factors in the new car market and a big increase in demand in the used market, especially relative to last year, is leading prices to be much higher in the used car market,” Ashley Langer, an assistant professor of economics at the University of Arizona.

She said it’s too soon to say when exactly used car prices will level back out.

Until production returns to normal, Ford says it plans to make only half its normal number of vehicles through June. General Motors has stopped making some smaller cars and SUVs to use chips for higher-profit vehicles.

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