Although 3 years have passed since the pandemic, it still affects our everyday lives and our economy. Today we will talk about how COVID-19 affects the automotive industry and how we, as a society, are responding to it.
The average vehicle age has been going up since 2019 due mostly to auto manufacturing improvements. According to S&P Global Mobility, the average age of vehicles on the road today is at a record high of 12.5 years old. Americans are now bucking the trend of exchanging their vehicles for new ones every 3 years and embracing a new joy for car care. But why you might ask? The pandemic of 2020!
The 2020 pandemic triggered a global shortage of many products due to slowed assembly lines across the globe. The automotive industry feels the struggle most with manufacturing and parts, like automotive computer chips. These vital components run radios, gas pedals, transmissions; just about everything on your vehicle, and just like many auto parts they are scarce.
Due to the shortage of vital components in the automotive manufacturing process, the average price of a new vehicle has increased by 24%, According to Edmunds.com. On top of that outrageous percentage, the loan rates have ballooned by 7%. If you think that a used vehicle is a better option, then you should know that used vehicles have increased by a whopping 40% due to the demand. This makes the average new vehicle cost $729 per month and a used vehicle $563 per month. The average U.S. household cannot keep up with these kinds of payments and still afford food, housing, and utilities.
With all this in mind, more vehicle owners are deciding to stick with what they have. Choosing to spend more on maintenance than buying a new vehicle. Even with rising repair costs, it is currently more cost-effective to fix an older vehicle than purchase a new one. As a result, auto shops are seeing more and more cars with 250,000 to 300,000 miles on them in our shops.
As more new vehicles become available, sales are predicted to reach 14.5 million this year, but they are not likely to reach the pre-pandemic annual sales of 17 million anytime soon. Even with dealer discounts that have helped previously, the prices are likely to stay much higher than pre-pandemic levels. As we, as a society, figure out how to maneuver our new reality, many are searching for information on how to cut out major repairs in their vehicle’s future.
Until Next time, Stay safe my friends!
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