Microchips: The reason you can’t afford a clean E36, ZL1 or 991
Dramatic, that’s the only way to describe the used car market right now and I’m certain it will only get more so. Just this past week I was sent an ad on Kijiji that listed a used, albeit fresh off the lot, Camaro listed for $20k over the MSRP. The best part was that the lister was honest in the description saying that due to limited production numbers they were asking more than what they bought it for.
This is just a sign of the problems to come. Have you tried looking for any enthusiast used car that could be defined as clean lately? An E36 M3 or 328IS used to be affordable but due to the limited numbers and increased demand they are starting to rocket in price. Not by hundreds, but by thousands. Sounds like the housing market boom from only a year ago; a simple case of supply and demand.
The 2019 pandemic has lasted longer than anyone expected, but caused a change of perspective for many people. The desire to spend discretionary income didn’t change, it simply shifted from the intangible experiences such as sports games, concerts and vacations to the tangible goods. There’s a reason we see online retailers delivering on Sundays! Now compound that problem with supply chain issues.
That brings me to the point of this all. The dominos of the “chip shortage” are all falling together. Let’s start with the easy one, we bought more and squeezed production. Then factor in the struggle among nations and the sanctions against China; furthering the manufacturing squeeze. On top of it all Japanese manufacturer Renesis Electronics, who accounts for 30% of the global market for microcontroller units used in vehicles, whose building caught fire causing catastrophic damage directly to their production lines has led to the massive supply shortage.
So with manufacturers scaling back their production to ensure profitability, coupled with people having more discretionary income to spend on tech toys (including cars and powered equipment) it’s leading to delays in production which is causing the value of used cars to go up.
It’s a real mess, and there’s no clear answer in sight as to when these increases will change. Cars that are desirable and out of production do simply not increase in supply. Then there is the overall shift to electric vehicles and cross overs. Convenience and luxury over drivability and feel. That car you may have had your eye on, won’t last long and there’s no guarantee it will come around again. Welcome to a crash course in supply and demand, sorry about your luck maybe look for a bicycle. Oh wait, you can’t buy those either.