For those who've been living on Mars the past few months, you should know there's a global shortage of computer chips. It's affecting pretty much every industry that requires chips in its products, but the auto industry is really taking it on the chin. We've already seen production cuts and delays from numerous manufacturers, and that's driving up prices at dealerships. Apparently, a good chunk of buyers are willing to accept that.
In fact, a report from Cox Automotive states that close to 50 percent of new car buyers are prepared to pay a modest premium over MSRP to get their new ride this year. The report cites research from Kelley Blue Book (part of Cox Automotive) conducted during the last week of April, revealing that 4 out of 10 buyers would pay a 12-percent premium over sticker price to get their new car right now instead of waiting for better days. Based on the average new car price in the US of around $41,000, that equates to a $5,000 markup.
The study also shows that buyers are well aware of the current situation. 87 percent of those surveyed knew about the chip shortage, while 73 percent were expecting to see higher vehicle prices as a result. Clearly, not all of those people are willing to pay that extra price, but at the same time, the study says 23 percent won't pivot to the used market. However, 37 percent of buyers are willing to delay their purchase until the market is better.
Either way you slice it, the coming months won't be good for either new car buyers or automakers. Widespread disruptions in production could lead to revenue losses in the billions for major brands. On the retail side, buyers will face limited selection and a high likelihood of higher prices, especially on popular models.