The economy continues to rebound after the COVID-19 pandemic, but with the current shortage of solid-state chips, many are traveling far just to get the car they want. It doesn’t matter whether a vehicle is new or used, dealerships run on empty.
Nearly 10% of vehicle buyers traveled out of state to buy the ride they wanted, according to a new survey from Cars.com, an online auto market. Of the 12,000 respondents, 56% bought a new vehicle, while 43% bought a used vehicle.
A shortage of computer chips has caused a number of auto factories to be temporarily shut down in recent months as they cannot complete building new vehicles without adequate parts.
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These problems have contributed to a surge in used car prices. With newer vehicles harder to find, used cars are suddenly a popular commodity.
And that means many people are willing to cross state borders to get what they want.
“We have seen inventory plummet from both a new and used perspective as the chip shortage continues to impact the industry,” said Kelsey Mays, associate editor at Cars.com.
National auto inventories declined steadily over the year, reaching an all-time low, said Bryce Gill, economist at First Trust Portfolios, an investment management firm.
The inventory of new vehicles assembled in North America at the start of 2021 stood at 396,500, and has now fallen to 254,800, according to the United States Bureau of Economic Analysis.
“People have a specific car they want, and their local dealership just doesn’t have it in stock,” says Gill. “That’s why they search and find a place, you know, 200 miles away that has what they’re looking for.”
The distance traveled to get a new vehicle varies, with 51% going 25 miles, 20% going 50 miles, and 13% going over 250 miles.
Supply chain issues and labor shortages will continue for the rest of the year and the struggle to meet demand for vehicles will not go away overnight. It’s like “a bunch of gears spinning together,” says Mays.
Even a drive to another state may not be enough to get exactly what you want.
Car buyers should “be prepared to compromise on things like color and specific features and take the best of the options.” You might not get everything you are looking for, ”says Gill.
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Car purchases across state borders
Here are three tips for anyone considering buying a car outside of their home country:
- Trading in your vehicle will be your greatest leverage. Maximize your business value by visiting multiple dealerships and seeing what they will offer you.
- Do your research before hitting the freeway. While many major cities like New York, Los Angeles, and Chicago will have more choices, they may be too far away by car. Checking dealers online to see current inventory is a great idea to assess what’s closest to you.
- Check how much tax you will pay. If you buy in a state without sales tax, you will still need to re-register your car at home and pay taxes. Make sure you see what trade credits the dealership will offer as well, as these relate to your sales tax.