Why is it so difficult to buy a car these days?

Feeling like it’s time to refresh your ride? Expert advice says think twice.

Mike Sinclair, Editor-in-Chief of car sales says his top tip is “buy what you need, not what you want. If you’re happy with your car and don’t need to change it, it’s probably a good time to jump on it.”

You may have heard of the global “chip shortage” – more on that later – but Australia’s current auto woes are a perfect storm of conditions. Much like rising energy prices, the rising cost of cars is being impacted (among other things) by the war in Ukraine, the impact of COVID-19 and fuel prices.

What is the chip shortage and why can’t I find the new car I want?

If you’re looking for this sweet new model, you might have a hard time.

There are roadblocks in the process from production to delivery and the cars just aren’t there.

What you may have heard about the chip offering relates to a global semiconductor shortage that has been slowed by COVID-19 but has been long-standing in the industry. With production slowing and long-term shortages in the region, the increased demand for computer chips in cars is significantly outpacing the production rate.

Sinclair explains: “Cars need more and more computers. There is even a small computer in a heated car seat. Chip loading into cars has gone through the roof — all these great security features that have been built into cars require computers,” he added, adding that the problems we’re seeing now “would come anyway.”

It’s not just about the chips – other key components are critically delayed.

A fan of German engines like Audi, Volkswagen and BMW? These brands all historically sourced their automotive cable loops from manufacturers in Ukraine. This process is understandably being significantly delayed by the Russia-Ukraine conflict.

The complications don’t end there as the world copes with the ongoing effects of COVID-19. As Chinese auto production slumped in April due to COVID shutdowns, Chinese industry is working to maintain stable output as demand continues to rise. COVID-19 continues to impact the supply chain in smaller ways as sickness and absenteeism disrupt work flow.

Then it’s time to come to Australia, which is a subject in itself. With fuel prices at an all-time high, shipping is the most expensive, and you’re sure to feel that burn in retail prices.

Not to mention the massive fumigation delays invasive stink bugs when importing a car – believe it or not!

All of these factors combine to create a less than ideal market. Cars priced above their recommended prices are becoming more common, as are massive backlogs of order fulfillment for specific models.

Are used cars the way to go?

Think you could stick with a used car? Be careful.

Used car prices have continued to rise over the past 12 months, according to the May Used Car Price Index from Datium Insights and Moody’s Analytics. During Aussie’s household savings stayed above pre-pandemic levels and cars are in high demand, we don’t have many cars ready to go.

It is not uncommon for a used car with 50,000 kilometers on the odometer to be sold for the same or more than the original retail price. Still foreign? It’s not uncommon for this listing to be quickly taken.

Sinclair recommends using a comparison site and familiarizing yourself with the car you are looking for when searching the market for a used car. It’s important to “understand how many are out there, and particularly to understand if there’s any stock in your area,” he says. In this case, the knowledge will help you navigate the market much more effectively.

What does that mean for my wallet?

Well, it’s great news if you’re looking to sell (and don’t want to replace it with a new car right away). Your car doesn’t necessarily go down in value once you’ve driven a few miles, and it might be a good time to take advantage of that.

Alternatively, if you decide to stick with your current car, that’s more money in your back pocket. Think how to make the most of it by comparing savings accounts.

There are lights in this somber landscape. Sinclair points to South Korean manufacturers as reliable suppliers, along with some Chinese automakers when production is in full swing. He also notes that between these high-demand and low-supply periods, there will be “a ebb and flow of models as production is released or the Australian stuff comes online.”

In the meantime, the advice is to stick it out if you can. While it may not be too early, the industry is gradually finding workarounds and solutions to all these issues to meet current demand. If that is not an option and you are in need of a car right now, you should look into car loan options that could provide you with the assistance you need.

Compare and switch car loans with our car loan comparison calculator. Find our Best Auto Loans and Best Used Car Loans from the Mozo Experts Choice Awards to see our picks.

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