SIOUX FALLS, S.D. (KELO) — Driving past a car dealership in recent days, you may have noticed a difference. Gone in many cases are the sparse, half-empty lots brought about by a global shortage of computer chips that led auto manufacturers to chop production.
This shortage of vehicles has led to increased costs across the market, for both new and used vehicles. As of June 2021, the price of used cars in South Dakota has risen by 32.8%, or $8,507.
While there are signs the automotive industry is bouncing back in terms of supply, Brad Dumdie, owner of the Sioux Falls based used-car dealership Autoland says that the stabilization of supply might not bring with it a drop back to pre-pandemic prices.
“Time will tell us this,” said Dumdie, “but I think at this point in time we’re experiencing inflation. A lot of times people think the prices of cars are going up and that they’re going to crash and come back, but I tend to believe that we’re going to see a bit of inflation — what used to be a $10,000 used car is now a $12,000 used car and probably will stay there just based on inflation.”
Dumdie says the car market is rebounding.
“I can see it starting to come back, starting with trucks — manufacturing from the pandemic is starting to kick in,” he said.
However, Autoland is still not operating with a full inventory. “I generally try to keep around a hundred [vehicles], give or take, and we’ve probably run more at 80 or 90,” he says “so we haven’t been way off, but it seems like it’s turning faster.”
“This entire year’s been short of inventory. It’s been a little hard to find,” said Dumdie, who says this problem is because the dealers who generally sell mostly new vehicles are also low on inventory. “They’re buying up a lot of the used and trade-in stuff because they have nothing to sell.”
“I buy a lot of off-lease cars,” said Dumdie. “Cars that people have leased for two to three years, and the manufacturers or the dealer who leased it usually gets the first shot at that — a lot of those dealers are buying those before they actually get to the auctions — we don’t have the opportunity to buy them.”
While the shortage of vehicles this past year has driven up the price of new and used cars, it also had an effect on trade-in value. “It kinda washes out in the end — It’s definitely driven the prices of used cars up, but on the flip side it’s also driven the price of people’s trade-ins up,” said Dumdie.
If you’ve been waiting to sell you car, hoping for it’s value to climb higher though, Dumdie says now may be your last chance.
“We’re seeing those [trade-in] prices already from Kelly Blue Book coming down — with manufacturing going strong and sales actually probably curbing off a little bit in the winter months — right now would be the time,” he said. “If you’re trying to sell your car, you want to do it now.”
Despite the challenges, Dumdie says 2021 has been a good year. “It’s been different in the respect of how the inventory is and the prices for the inventory, but the interest rates have been low and most people finance so that keeps that in line. In 2020 obviously we went through the time when there just was no business — there was a time there where it was really bad, but then it started to pick back up and that just hasn’t quit since.”