COLORADO, USA — It's getting a little easier to buy a house, but still pretty hard to buy a car.
More than two years after pandemic disruptions started, the auto industry is still dealing with low inventory.
The Colorado Automobile Dealers Association (CADA) publishes a quarterly Colorado Auto Outlook, and the latest report released in July reviews data from the first six months of 2022.
New car sales, which are measured by new registrations, dropped 11.3% the first half of this year. Used car sales fell 7.1%
This follows an unprecedented and uncertain two years where car sales first dipped in the early months of the pandemic, then surged through 2021, only to dip again this year. Industry experts in Colorado point to ongoing inventory shortages limiting supply and driving up prices, and now rising interest rates affecting affordability.
“The supply chain shortages, led by the microchip shortages, continue,” said CADA CEO, Tim Jackson. “Demand today is probably fading a little bit with higher interest rates, and inflation as its currently standing.”
“It’s not uncommon for a consumer to go shopping for a car and to not even be able to find one to test drive,” he said. “In a new car showroom, which is very rare.”
But even with sales down, Jackson said the industry has significant pent-up demand.
“We can withstand a cooling of consumer demand in the short term because we can’t build cars fast enough to fill orders for a while,” he said.
“So it’s not going to be like going off a cliff, its [going to be] a general decline in the order bank for a while. We have order banks – from dealers and consumers – at higher levels than at any time in history.”
The report details factors that are boosting sales (pent up demand, low unemployment, increased household weather, new products coming) and factors holding back sales (low inventory, rising vehicle prices, fear of a pending recession).
It also details which car makers lead the market share in Colorado currently (Toyota Subaru, Jeep, Honda) and the current share of battery electric cars in the market (6.4%).
So what happens next? Will the industry normalize soon?
“I’d say within the industry there's a general consensus, we’re at least 1.5-2 years away from some normalization,” Jackson said. “And hopefully in 1-2 years, we’ll see some normalization, and that will lead to being back to normal within 3-4 years,” he suggested.
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