August 18, 2021

Vehicle price observations

So just what is driving these higher vehicle prices?

Lets's do a little history.  Many people blame the 911 event for forcing vehicle dealers to offer 0% financing.  But in fact, in 1997 dealers started to offer very low interest on new vehicle purchases(as low as 1.5%).  This was concerning to those of us in the down line of repairing aging vehicles as opposed to repairing newer vehicles.  We could see what was coming. The 911 event accelerated people to get into new and new-used vehicles because of extremely low interest rates.  And as a result many older used vehicles were not repaired but sold very cheaply.  Most shops would be 3 weeks with nothing to do, and then 3 weeks were we couldn't keep up.  This went on till about 2003 and then it started to even out again.

That said, several years ago we started to see the price of newer vehicles become quite high, and individuals were having trouble getting into newer vehicles.  It wasn't Covid-19 causing the prices to go up, nor was it the micro chip shortage because of supply chain troubles.  In fact, for several years now economists have been forecasting hyper inflation.  And here is a contributing factor.

The new car buyer, wants more and more from that new car.  They want more safety, the latest audio systems, more performance, better fuel mileage, extended warranties, recalls, dial-in suspension systems, and more comfortable interiors just to name a few.  Also, the insurance companies want more out of the newer vehicles so that accident reports can nail down the fault driver.  This means tire pressure warning systems, lane cameras, driver assist systems, and there are quite a few other systems that have black boxes that the insurance company can look at to see which driver was not driving responsibly or keeping their vehicle in good maintenance.  I could go on...This all comes with a price.

Messing with the supply system of this complex web of infrastructure to support sophisticated, luxurious transportation, just accelerated what was already going to happen.

Our demands, as consumers of vehicles, has driven higher prices more than we would like to admit.

My personal opinion is one word that describes it best.  


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