Car prices could go up thanks to Ida, Nicolas

AUSTIN (KXAN) — If you’re thinking of buying a new or used car soon, you may need to hit the brakes.

Economic experts say an industry ravaged by microchip shortages was seeing prices plummet between June and August, but now they worry it could rise again due to Hurricanes Ida and Nicolas.

“Before the storm, car production fell by about a third to 60% — depending on the car company,” said Edward Anderson, Wright Centennial Professor for Management of Innovative Technology at the University of Texas’ McCombs School of Business. .

In the past few weeks, Toyota announced it would cut more than 400,000 units during September and October due to prolonged chip shortages, with production already lower than previously announced in August.

GM and Ford have also announced another round of cuts.

Anderson says that low inventory had already driven up prices for new cars, in turn raising prices and demand for older cars as well.

“We’ve seen pricing increase by up to 50% over the past year,” said Grant Feek, CEO of Trade, the online person-to-person marketplace for cars. “There’s been a pretty, very unprecedented increase in US car pricing right now.”

Killian Auto Sales kept about 40 to 60 cars at a time on its lot in Round Rock, Texas.

“We have a saying here that we’re not a museum, so we don’t need to collect a lot of cars,” said Michael Killian, partner at Killian Auto Sales.

Now, Killian says that just fluctuates between two and 15 cars in his lot. He says fewer cars are coming into his used lots from new car dealers.

“The Chevy stores I go to every day, they usually have zero to three cars, and they used to have 800 new cars in there,” Killian said.

Feek worries the storm “could mean disaster for the car market.”

“You can get an entire area with their vehicles wiped out,” he said. “It’s going to be very challenging, given the already existing shortage, to get a replacement vehicle.”

Anderson says that when Hurricane Harvey struck, about 500,000 drivers were in need of new cars.

“Hurricane Harvey … raised the prices of cars nationwide by 3%,” said Anderson, a supply chain specialist. “We’ve never had a car shortage in terms of production, as we do now.”

“It’s just one of those deals where you don’t even really know how to plan for it, you just go day in and do what you can,” Killian said.

They say they still see the product arriving on a daily basis, so it may not be the car you’re looking for.

Anderson also warned that flood-damaged cars could hit the used car market.

“We’ve seen people try to do this in earlier storms, where they sold cars that were actually damaged by floods and just tried to cover it up,” he said.

So how can you tell if the car you’re about to buy has some sort of flooding? Joshua Zuber with AAA Texas says the first thing you want to do is look for any obvious signs of damage.

“You’re looking at the upholstery, the carpet, you’re looking at the various metal components of the vehicle, you know there’s no rust or rust,” he explained.

He also says it’s a good idea to do a vehicle report, title check, and pre-purchase inspection before buying a vehicle.

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