I recently saw an ad in the Denver metro area for a car dealer that shocked me. Basic cars going for extreme prices. A 2022 Honda Santa Fe for $55,000, Hyundai Ioniq 5 for $60,000, and a Kia Sorento for $40,000.
How can cars be so expensive these days? Hundreds of millions of people rely on cars in their day to day lives, and many of them can’t spend very much money on a car. The nationwide chip and part shortages has Americans spending more than they can afford on regular products.
Christie Smith lives in Athens, Georgia and has been car shopping for months. “Im waiting until prices go down,” and then she said “I would get a Honda CRV, Toyota Rav 4, or Hyundai Tusan,” Smith said. Christie narrowed her search down to these cars. “Honda and Toyota had no cars on their lot.”
She explained that she could order a Honda or Toyota, however the dealers couldn’t lock in a price. If she ordered one of these, she would be locked into a contract to buy it, however not know the price until she gets the car. “Hyundai had Tusan cars in stock, but the dealer would add many fees to the price, and the car would be $8000 dollars more than the sticker price,” she said.
These are called scarcity tactics; dealers increasing the price because the cars are so hard to find. It is basic supply and demand, where low supply in addition with high demand equates to a large price. Smith currently has an eleven year old Honda CRV, that she bought new for about $27,000. Today, a Honda CRV would be around $35,000, however with the added fees, it could be $40,000.
Smith is in the same position as millions of people. A local Athens resident said that he bought his daughter a car, and it was the same model he bought his other daughter 5 years ago, and it was $5,000 dollars more than 5 years ago.
As the world opens up after experiencing the COVID-19 pandemic, and more ships with microchips come into America, car prices should go down; but until we see that day, people are going to have to pay more for cars.