Tuesday, June 15, 2021

COVID causes shortage of new and used cars — and rentals

BELLEFONTE — Ron Kratzer, sales manager of Joel Confer Ford in Bellefonte, has been selling cars for more than 50 years.

“I sold my first car when I was 15 years old,” said Kratzer. “I’ve seen it all.”

Since the COVID-19 outbreak started causing shutdowns last year, Kratzer said his company “did very well” in terms of sales.

“This year is a year I never would have believed prices could go as high as they did at auction,” said Kratzer. “The market is so red hot, and the last couple weeks we’ve seen a little bit of a cool-off, but not significant. It’s going down from a crazy high to a little bit of a normal high.”

Nationwide, Kratzer explained, there’s a shortage of both new and used cars.

“Sales of new vehicles in the U.S. are expected to close this year down at least 15 percent, which would mark one of the industry’s worst annual declines since at least 1980,” CNBC.com reported in December 2020.

“A big part is the shortage of semiconductors to build new vehicles,” said Kratzer.

Semiconductors are “the ‘brain’ within every electronic device in the world,” reports The Guardian, and the shortage in chips “has been steadily worsening since last year” as the supply chain was delayed at the same time demand for new TVs, gaming systems, etc., surged.

‘HAVE A RENTAL CAR LINED UP’

The car production shortage may affect your summer vacation plans, Kratzer warned.

“The car rental companies are actually out at auction buying cars for their fleets because they can’t get new ones from the manufacturers,” said Kratzer. “That’s further driving the price up, because normally the rental companies are selling at auction. They turn their fleet every so often – every six months or so – and they can’t do that right now, because they can’t replace those cars. So they’re keeping them longer and putting more miles on their rental fleet, and the travel industry has picked up so much that they’re short on rental cars. If you’re traveling to some of these resorts, you better make sure you have a rental car lined up, because there’s a lot of price-gouging gong on. I’ve heard of some ridiculous prices.”

 I WOULDN’T HESITATE’

Cars at Joel Confer are “turning very quickly,” according to Kratzer, who has advice for people who need a new car.

“I would suggest to anybody who’s in the market for a car, especially for someone who really has to replace their car — the old one’s just tired and worn out — if they find anything that’s close to what their specifications and needs are, I wouldn’t hesitate, I would buy it,” said Kratzer. “I don’t see this getting any better until the end of the year, as far as prices getting relaxed.

“Last month was an excellent month,” continued Kratzer. “The month before that was an excellent month, but now our inventory is down to less than half on new and half on used, compared to what we normally carry. Therefore, that’s hurting our sales volume quite a bit.”

Kratzer adds that slowly but surely, “things are getting back to sort of some normalcy again.”