History Will Mark 2022 As The Turning Point for The Auto Industry.
No matter where you exist in the vast, global automobile industrial complex, 2021 was an unusual year. As the industry flexes to adapt, a range of trends are impacting its future in 2022 and beyond — how vehicles are powered, driven, shopped for, and acquired. Change isn’t just coming, it’s here. Our staff focuses on the trends shaping the future of the rapidly changing auto industry.
First, some bad news
In 2020 demand came back with an explosion — stronger than expected — which caught automakers unable to meet that demand thanks of course, to semiconductor chip shortages and supply chain delays. At that point, prices for both new and used cars began their meteoric rise.
In 2022, general opinion is (and we’re seeing) that the industry is in for much of the same.
“Competition for new vehicles will be fierce as inventory shortages persist in 2022,” said Ivan Drury, senior manager of insights for the auto website Edmunds.
And of course, inflation continues to boost prices for vehicles in 2022. As inflation soared 7% in 2021 (largest increase in nearly 40 years), the Labor Department reported last week. “Used car and truck prices, a main driver of the surge, shot up 37% last year, with the average used vehicle now costing $29,000″, according to Edmunds.
The result for car buyers? In a nutshell — limited selection, dealership markups, no discounts, and a greater sense of urgency to move quickly on a deal. The reality is that the industry is in flux, and may change more dramatically in the near future. The issues that hamstrung automakers — and buyers — will teach many lessons in the years to come, and bring change to the retail auto-buying experience.
Here are the Miamicars.com 5 ways that the year 2022 will mark the advent of change in the auto biz.
5. Higher prices, no discounts, and no clear end in sight.
Depending on the brand and the location, vehicles on the average Miami lot are more likely to be more expensive, either marked-up in price or with dealer-installed accessories. And dealerships are much less likely to come down on price since they know there aren’t many other options available. Supply and demand at its most painful.
According to Edmunds, paying MSRP (or Manufacturer’s Suggested Retail Price) might actually be a “good deal,” relatively speaking.
4. “I can have it for you in eight weeks.”
“We don’t have it in black. In fact, we don’t have it in any color right now. I can order it.” Buyers are hearing that a lot lately. The good news is that by ordering your new car, truck or SUV — if you can wait — ensures that you get exactly the color and options you want.
Pre-ordering vehicles makes sense for dealers and buyers — it saves the dealership on lot fees and insurance for vehicles parked on- or off-site, and it can then pass the savings on to the consumer. Ironically, the “savings” these days is paying MSRP and not being charged for dealer add-ons or the convenience of having a vehicle right away.
3. The new complexities of leasing.
Edmunds analysts report that as inventories remain low and the cars that are in stock tend to be more loaded with options, they’re less likely to be targeted by automakers’ leasing programs because these vehicles typically suffer higher depreciation than their mid- to lower-level-trim counterparts. Lessees can also consider buying out the lease — possibly a better deal since the selling price for it was calculated years before the market took a turn.
So lease with consideration and caution.
2. Used car prices go stratospheric!
It’s an “upward spiral” in prices! As a crush of new-vehicle shoppers turned to the used market, it has caused a shortage (and record-high prices) for used vehicles. Edmunds analysts predict that in 2022, the average used vehicle price will surpass the $30,000 mark for the first time. Prices for 1-to-3-year-old vehicles will also often approach or exceed the price of what they would cost brand-new. Experts are not sure when — or if — this insanity will snap back to reality.
1. Electric vehicle sales will surpass expectations for 2022.
It’s happening faster than many industry pundits predicted. Folks are turning to hybrids and full EVs at a rapid rate. And automakers are working overtime to fill the demand — while planning an EV roadmap for the future.
According to the latest data, if you’re reading this — and your situation accommodates charging — you have a very good chance of going electric for your next vehicle. Most likely a new electric Pickup from Ford, Chevy, Rivian, Cybertruck or a Hummer! Or an SUV from a number of automakers. Perhaps a Tesla or Lucid. In fact, there’s a long list of quality electrics available.
Fierce competition among EV makers Tesla, Ford, General Motors, BMW, Hyundai, Toyota, Honda, Volkswagen and others is beginning to drive down prices in the category. Electric, hybrid and plug-in hybrids accounted for 8.2% of all light vehicles sold in the U.S. in the first half of 2021, according to Wards Auto Intelligence. Electric vehicles accounted for 2.3% of those sales, hybrids 4.9% and plug-in hybrids 1%.
Tip: If you’re planning on purchasing a car that you intend to drive for the next 10 years, electric and hybrid vehicle options give you a lot to consider.