Hello all - was hoping someone could take a shot at explaining something in layman’s terms, and I’m ok being spoken to like an idiot.
I haven’t been on the site in awhile after leasing an MDX in March 2021. Seems a lot has changed since then.
I’ve read over the last few days how nothing is leasing well, used car prices are irrationally high, and the overall car market is “crazy” and out of balance.
Can anyone spell it out as to why? But as simply and clearly as possible?
(The context behind my question is I’d like to get out of our paid off minivan and lease a 2nd SUV, but my god the leases out there are terrible, so seeking to understand the current conditions of the market).
There is a worldwide shortage of microchips and that has decimated production of new vehicles. It has driven used car prices to enormous heights and new cars often sell for MSRP or over.
I would hold on to the paid off minivan and wait out the market.
Most of it boils down to supply/demand, but too succinct falls apart on further examination:
Chip shortages (mostly due to ordering for 2021 in 2020 based on early covid demand drop) is a proximate cause of new car shortages and price levels, but not most of the used car shortages or inflation (lack of lease returns, rental car companies dumping inventory in early 2020 then revenge buying in early 2021, some substitute-buying by new car purchasers, the Carvanas and Vrooms of the world 2x-3x their balance sheets with inventory, auction prices riding to the ceiling and then bouncing).
The shortages are with us until inventory and production can meet demand: we have seen some signals that used car inventory is getting there (high demand model shortages continue), for new cars I wouldn’t expect any deals that resemble 2019 before 2022.
Just to add to this, there has been an increase in demand for vehicles that further exasperates the issue. So instead of have 1 new car for every 1 person, there is now 1 new car for every 5 people due to the chip shortage, and 1 car for every 10 people due to the combo of demand and shortage (all made up numbers, just to illustrate my point). Consequently, used cars become more expensive as people don’t want to wait for new cars to arrive and new cars are being sold over MSRP for many mainstream manufacturers.
Thank you for the replies everyone. So is it fair to say that because of these conditions lease cash from the manufacturer is non existent and dealer discounts have gone away, thus the insane quotes? I have a quote of ~600 month (with the honor of paying 10 MSDs to even get to that number) with top tier credit for a Highlander, a HIGHLANDER!! And I think it’s a competitive quote too for this market.
Agree with everything above but also heard the luxury market exploded in late 2020 and carrying over. High end buyers who could not take a vacation or spend disposable income due to the covid restrictions would buy a new car. Finance, Tech jobs had tremendous years in 2020. Not to say it is the only reason but when I heard that it did make sense to me.
