New Car Shortage Means Big Bucks For Used Vehicles

DENVER (CBS4) - Your vehicle could be worth more than you think. The pandemic has left car dealerships with low inventory, leading many to offer generous trade values for used cars. A critical component of vehicles is in short supply, but the demand for new wheels is growing. Automotive experts say there's never been a better time to trade in your car.

"It's a bad time to buy a car. On the flip side, it's a great time if somebody has extra cars in the driveway that they no longer need," said Tim Jackson, President and CEO of Colorado Automobile Dealers Association. "We've heard of some used cars bringing in more than they sold for new."

Jackson says there's traditionally a high demand for pickups, vans and SUVs in the Colorado market. Now they're in very short supply. The auto industry has been hit hard by one of the smallest parts of the vehicle -- the semiconductor.

"Semiconductor is a fancy way to say microchip. A lot of the microchips that we use in our phones, tablets and gaming devices are used in cars. They're basically computers. There's a shortage of them because the demand for consumer electronics has gotten so high," said Nick Pacifico, Vice President of Rickenbaugh Automotive Group. "The semiconductor producers can't catch up fast enough with the demand."

Pacifico says he's never seen a market like this. The chip shortage is so severe that some companies have halted production on certain models. General Motors is stockpiling partially finished vehicles until they get the chips necessary to complete the vehicles. Car lots are so sparse due to the supply shortage, that some dealers are asking customers to buy their cars back.

"If I sell it to you, I'm not going to get another one. We don't have a guarantee that we're going to be able to get another new car just like the one we sold. Since there's a shortage of new car supply, it's been increasing used car prices nearly weekly," said Pacifico.

A used car Pacifico appraised two weeks ago is already worth $1,000 more. Jackson says the chip shortage has also made rental cars scarcer, driving up prices for buyers.

"Rental car companies can't buy them new because they're not available. The companies are going to what are basically used car auctions. That has increased the price on used cars," explained Jackson.

Automotive experts don't expect the chip supply to be replenished for several months. Pacifico believes it could take nearly two years.