With No End in Sight, The Chip Crisis Causes Impatience with Customers

As the chip crisis continues, dealerships are facing the problem of dismal inventory. With very little selection and the inability to restock as quickly, dealerships are met with an overly frustrated client base.

Customers are becoming increasingly frustrated as well as impatient due to the fear produced by little inventory. If a customer doesn’t claim a vehicle, it could be taken from them with no alternative. Consequently, across the nation, there have been tense incidences of customers fighting for the same product.

For instance, an altercation between two customers took place at a South Carolina dealership over an SUV! After one potential buyer saw another looking at the desired SUV, the buyer began to yell. He insisted, the potential buyer, that the other individual had no right to even look at the vehicle since he was set on purchasing it.

Unfortunately, occurrences like these will no doubt continue with little production. Assembly plants report either financial or physical setbacks. While General Motors in only using four of their 14 North America assembly plants, Toyota Motor Corp. is experiencing a costly cutback equivalent to about 360,000 vehicles of global output.

The root of these problems stem from the chip crisis. At first, several automakers and analysts were hopeful the crisis would solve itself out and normalize by the end of 2021. However, with evidence of coronavirus cases increasing, that prediction has been dismissed.

Over the past year or so, the automotive industry has dealt with its fair share of economic setbacks. The chip crisis is not only one of those setbacks, but an increasingly prevalent one. As to how the automotive industry handles as well as survives this crisis… only time will tell.

Low Supply of Chips Cause Used-Car Prices to Soar

Due to a global shortage of chips, used vehicle prices have been soaring, leading to a decrease in availability among new vehicles and an increase in the trade-in values for older or used vehicles.  

According to the popular car research website, Edmunds, the average value of used vehicles traded in reached a record high number in March. Trade-ins averaged about $17,080 for the month, increasing about 21% from the same period one year earlier.  

The global chip shortage has primarily caused this, as it has obstructed the auto industry’s ability to produce and manufacture new vehicles. As a result, this has motivated individuals to shop for used vehicles, causing prices to soar. The global chip shortage occurred due to the COVID-19 pandemic’s disruption on the supply chain. In turn, this has caused a disruption in new vehicle production, but it has also caused car-shopper demand to surge.  

Additionally, the market for certified pre-owned vehicles is highly advantageous to car-sellers currently. According to Cox Automotive, used vehicle sales increased about 36% from February to March, allowing for total used vehicle sales to increase about 117% from March 2020. On the other hand, the amount of new vehicles available for sale has decreased 36% since March 2020, and new vehicle inventory has decreased more than 15% since the global chip shortage occurred.  

Clearly, now is a great time for consumers to sell their used vehicles, as well as to make new car purchases. Ivan Drury, Edmunds’ senior manager of insights, stated that the “inventory situation is not going to get any better any time soon, and consumers could essentially be wiping away multiple car payments with the added value of their trade-in.”  

Increase in Used Car Prices Due to Covid-19

For the last several years, automakers have taken several actions in order to increase the prices and make more profit out of every sale in an effort to reduce their exposure to cars that offer less profit potential. In fact, large manufacturers such as Ford, GM, Fiat, and Chrysler have stopped the sale of numerous sedans; similarly, companies like Honda and Toyota have also reduced the sales of lower-priced vehicles. 

The global pandemic came to shake things up, starting with the way food is purchased all the way toward how people buy their cars and trucks with greater emphasis onlineThe global shortage of computer chips necessary for vehicles has had a significant impact on this matter. Due to the lockdowns and strict quarantine during the first few months after the virus started, the auto industry started to face some changes in their North American factories, the functioning and production of the industry also seemed to be affected by it. Because the production was inexistent or reduced for a period of time, the industry entered to a phase of very high-demand and lower supply which caused an imbalance within the industry. This has lead to a big jump in prices. In other words, too few vehicles while having too many customers.  

Since it is true that most people are shifting their lifestyles toward a larger emphasis of staying at home, many would infer that cars would not be needed as much. Howeverthe opposite trend has happening this year. The pandemic and importance of social distancing actually reduced the interest in public transportation, thus increasing the reliance on personal cars and trucks. Therefore, many of those who relied on public transportation had to look for other safer alternatives to go out and be socially distant with one other. Without a doubt, buying a car is definitely a covid-friendly transportation alternative.  

Affordability remains an issue for many. While used cars might be the solution for those who can afford new car, the availability of used cars needs to increase in order to meet up with the high demand. Unreasonable prices are expected to open the door to dealers that would focus and get profit from low-priced new cars specifically, vehicles that count with the basic features and nothing else.  

Swapalease.com is noticing a trend where more people are utilizing the marketplace to find just the right car at the right payment level; one that they may not find at a dealer today. 

The Auto Industry Warns New-Car Buyers With Subprime Credit

How about good and suitable used cars? This is the invitation that the American auto industry has for those new-car buyers with a subprime credit score. Jonathan Smoke, chief economist for Cox Automotive Inc., at the American Financial Services Association annual Vehicle Finance Conference, on February 26 got to the conclusion that the new car industry niche is getting smaller over the time; it targets certain type of buyer and it gives a significant amount of attention into the credit profile of the prospective costumer. Although it is true that the business offers vehicle options from every size, color and design; subprime credit score will not be a beneficial aspect in any new car purchase, that is for sure.  

Smoke also talks about the commonly held belief that there is a new car for any budget or any situation; unfortunately, it is not as ideal as it sounds. In many cases, buying a brand-new car is not the best option and that is okay. Obtaining a used vehicle does not mean you are compromising quality nor safety; opting for secondhand cars can avoid stretching to stay up to date with unnecessary and unsustainable payment plans. 

According to Experian Automotive, all credit scores underneath six hundred are considered to be subprime. Over the pass of time, subprime customer numbers keep going down; in fact, today, that type of customer does not reach ten percent of the auto sales. At the same time, prices keep getting higher and the production of less expensive vehicles is decreasing. Cox Automotive stated at the online conference held recently “We essentially no longer have entry-level vehicles in the new-vehicle market.” Because of that, used cars are literally becoming the new entry-level vehicles, only those that are certified and are resold legally, of course.  

It is very probable that the global pandemic might have been one of the top influential factors in this change on the market; however, automakers are taking measures that are beneficial for them as a business, but also for the consumers that expect some needs to be fulfilled when it comes to buying a vehicle. Reinvention has been needed and most of the biggest automakers are still making decisions about the issue, some are still taking in the fact that subprime buyers could be out of the business.  

Credit history and performance will remain important, and it is imperative that any shopper on Swapalease.com maintain the right amount of credit to take over an existing lease. 

Hyundai and Kia Closer to Apple Car Deal

For years there have been speculations about Apple diving into the automotive industry by launching its own car; throughout the following years, It will be materializing all of the rumors. Hyundai and Kia have been working vigorously toward closing a deal with Apple on the development of its own autonomous and electric car which up until now has been referred to as the ‘Apple Car’.

However, there is no certainty of the partnership; in fact, many presume that Apple will end up working with a different automotive company since there is no evident nor strong reason for them to select this auto company. Both public relations representatives declined to answer or confirm the veracity of the deal, which leads us to assume that if the business is not structured yet, then there is still a lot of time for the concrete product to be launched.

Morgan Stanley analyst Katy Huberty pronounced herself on the financial aspect of the deal; she stated that this could immensely benefit Apple, to a point where they could reach ten trillion dollars by developing the Apple Car market. Even though their smartphone business is significant, the company would only need to buy 2% of the new deal shares in order to reach five-hundred billion dollars which is the annual amount sold in phones.

Needless to say, the car is planned to count with the highest level in technological structure and it is expected to be a self-drive car, meaning no one should be inside the vehicle in order for it to mobilize from one place to another. Also, many anticipate for it to be electrical and environmentally friendly. With that being said, it is fair for the public to expect either similarity or connections with the prestigious company, Tesla. Although Musk himself said that Apple CEO Tim Cook rejected the invitation of working together; without a doubt, these two successful companies together can start a completely new trend in transportation, robotaxis and self-driving cars. These types of innovations can transform the way in which food is deliver, how private and public transportation function, and many more things that only companies with such influence could achieve.

Should the Apple Car come to fruition, it will one day be a popular choice on the Swapalease.com marketplace.

Ford Production Is Also Being Affected by Chip Shortage

Semiconductor chips are essential when it comes to the manufacturing of new cars, it is connected with several important systems of the vehicle and they allow the engine to function as it should. Although these chips are seen in electronics and other consumer products, the current shortage has been seen in a specific industry. Last year, the entire automotive industry started noticing a shortage in the availability of this key piece; the auto demand had a very rapid and unexpected peak. Because of that, many companies were affected, and the global automotive business ends up on the same boat, since they all needed semiconductors in some way or another.

Ford is one of the companies from the auto manufacturers that already started cutting production down; action had to be taken due to the semiconductor chips shortage mentioned above. While they were doing great with their very profitable F-150 truck, the production had to be lowered to only two shifts per day, one less than before. Fortunately, the two plants that dropped production are expected to go back to normal by the end of February of this year, according to Ford spokeswoman Kelli Felker. Though the shortage is no good for the production numbers, the company’s stock shares have not felt the impact yet, in fact, they surprisingly went up.

Ford is just an example, important competitors of the brand had to make similar cuts in production. Volkswagen, Subaru, Toyota, Nissan, and various others are going through the same experience, expecting to be thousands of vehicles short of what was sold last quarter. The one purpose for them right now is to keep the plants running and to minimize the impact of the shortage in their financial realm. Ford president, Kumar Galhotra pronounced himself about this matter, referring to the semiconductor shortage as a “dynamic situation”. He expressed the effort that is being done in order to find solutions as fast as possible and the concern to relieve the damage that has been done.

General Motors confirmed some changes as well, what was going to be done at certain selected plants around the globe (Fairfax, Kansas; Ingersoll, Ontario, and San Luis Potosi, Mexico, South Korea). It is noticeable how the shortage has affected the industry; it is still unknown how it will evolve in the future, is hard to know if it will get better or worse. But what we do know is the changes and effort that come from the automotive companies, solutions are on their way.

Should the chip shortage significantly impact the supply of new vehicles in the months to come, demand for vehicles is expected to grow significantly in markets such as Swapalease.com for existing vehicles.

How Taking the Time to Drive Safely Can Save you Money on Gas

As a car owner, the price of gas is always on our minds. We are constantly trying different ways to find the best deal possible, whether it be through a gas app or even driving the extra mile to the gas station you know will be cheaper. The fluctuating prices of gas are confusing, and most of us cannot explain why the prices are constantly going up and down. But what if we told you, you do not need to worry about the gas prices as much as you are. There are simple ways that we can reduce the amount of gas you use while driving. The below tips will not only save you the gas money but will also ensure a safer driving experience.

Here are some tips on how to reduce the amount of gas our cars intake

1. Slow down and drive steady: Driving fast can be fun and exhilarating. But driving fast can lead to increased drag which increases fuel consumption. Driving the actual speed limit and staying at a steady speed will use gas more efficiently.

2. Monitor when and how you break: Some of us are heavy on the gas petal, while others are constantly riding the breaks. Braking excessively wastes gas and causes your brake pads to wear down sooner.

3. Keep the windows rolled up: You might not realize it but driving with the windows down wastes quite a bit of gas. This all has to do with eliminating wind resistance. Wind resistance in your vehicle once again increases the drag making it so more fuel is being used.

4. Gradually accelerate: When you gradually accelerate making your way up to speed, you are saving more on gas. Even though punching the gas will get you to the speed limit faster, it will burn up more fuel.

5. Do not carry unnecessary weight in your car: Sometimes it is impossible to avoid this. But each pound of excessive weight that you remove from your vehicle means the usage of less gas.

6. Keep up with general car maintenance: It is not only important to keep up with car maintain for safety purposes, but it could also save you money on gas. Sometimes we do not realize there is an issue because its minor but doing monthly checks on your engine could potentially save you money on gas if there is a problem.

In the Market for a New Vehicle, Is Now the Right Time?

Purchasing or leasing a vehicle as we all know is not a simple task or a straight-forward process.  Whether you are acquiring your first vehicle or your 5th vehicle, the process does not get any easier or less frustrating.  Buying or leasing a car at any time in your life is a big deal and an expensive purchase.  But what if you knew there were certain things took look out for when acquiring your vehicle?  In fact, there is a right and wrong time to get the best deals.

As somebody looking to acquire a vehicle, the first question you should ask yourself is about timing. Is now the right time?  If you do not know the answer to that question than you are in the right place.  Believe it or not getting the best deal possible on your new vehicle comes down to the intricacies of what day of the week it is, what month it is, and what time of the year it is.  Certain holidays during the year also bring potential opportunity for getting a better deal or lease terms as well.

To elaborate on the best day of the week for vehicle shopping, Monday historically has always been the best day of the week to negotiate a great deal.  The speculation as to why that is comes down to weekend shoppers. There is a higher chance the sales team has hit their weekend goals, so that come Monday, shoppers may get a better deal or more attention.

Do not forget though there is also a particular month you should go car hunting.  According to Cox Automotive, between the years of 2013 and 2018, data shows that May is the month when dealerships have the most foot traffic.  This could be attributed to the “aggressive holiday incentives and promotions” for Memorial Day.   Presidents Day, Memorial Day, July Fourth, Labor Day, Black Friday, and New Year’s Eve area all holidays that offer up great opportunities to walk away with that best car deal.

With all this being said, determining the best time to lease a vehicle may be out of your control, but Swapalease.com is here to help every day of the year. Visit www.swapalease.com to find your next lease deal.

2020 Hit the Auto Industry Hard, but Ended on A High Note, Why?

With the complete uncertainty and dreadful concerns surrounding the topic of Coronavirus, 2020 affected every aspect of normal day life, including greatly affecting the auto industry. The uncertain expectations that the year 2020 brought to the Auto Industry led to it suffering terribly, with sales being at an all-time low around the months of March and April, when the country went into lockdown.  What is interesting though, is there was a resurgence of auto sales which ended the year on an unexpected high note.  Which leads to the question of why the increase in sales?

One of the reasons why the auto industry took a positive turn in the right direction would be the implementation of the Covid-19 Vaccination.  The optimistic thought that the vaccination would enable consumers and businesses to return to somewhat of a “normal” lifestyle boosted the sales in the auto industry.

Another reason why sales increased would be the influx of people buying vehicles to avoid using the means of mass transit.  People also found themselves in situations where they had the opportunity to escape areas heavily affected by Covid-19 and relocate.  Another interesting reason why sales had increased is because people where finding more interest in purchasing light trucks vs. passenger vehicles, companies claim that they would have sold more light trucks if they had the inventory to keep up with all the orders.

Another interesting take on why the automobile industry did so well at the end of the year, would be how while some people faced economic problems others did much better economically because of not spending the amount of money they normally would on entertainment such as eating out and vacations.  Therefore, leading to an increase in used vehicles being sold and luxury vehicles.  It should be interesting to see what direction the future of the automobile industry goes in as the pandemic continues, but hopefully, nears an end.

Options When Your Lease Terms are Over

If you have been leasing your car and you have almost finished your lease term, you may be interested to know what your options are to acquire a new vehicle. Approximately 45-60 days before your lease ends, it is time to decide what you want to do with the vehicle. If you are unsure what to do at the end of your car lease, here are four options available to you:

  1. Buy Out the Car: If you really like the vehicle you leased, you can buy out the car from the dealer. It will cost you the residual amount of the value that was set in the lease.
  2. Extend your Lease: If you want to keep the same car, but do not want to buy it out, you can extend your lease. You can re-lease the car, but as a used-car lease instead. You may be able to negotiate a better deal as well!
  3. Return your Lease: You have the option to return your car to the lending company, who will end your lease responsibility and take the vehicle back into their inventory.
  4. Trade Up: If you find yourself enjoying the vehicle you have, and how the company has handled your lease, you can choose to lease again with the same company. You can trade up for a higher-end model car or get a new car altogether.

Fortunately, you do not have to be stuck in a car lease if you need out. Swapalease.com is the largest online marketplace for used car leases if you need options. Consider Swapalease.com as a matchmaking service for cars, matching up individuals who want to get out of a car lease with individuals who want to get into a car lease. The online marketplace has vehicles and customers in every state in the continental United States and Canada.