World Used Car Prices Rise 20 Percent, What Causes It?

Illustration. (Photo: Unsplash)

JAKARTA - The world's automotive industry is experiencing a shortage of new car stocks. This is because production is hampered due to the lack of supply of semiconductor chips. This condition causes the price of used cars to continue to soar. Even up to 20 percent since April 2021.

HPI's Head of Motor Assessment and Analyst, Darren Martin explained that the average used car price rose by a fifth in the last five months. He said, usually they will depreciate 5 percent during this period.

"The average price has skyrocketed 20 percent since April, even family cars attract a very large premium. This price explosion is due to the acute scarcity of new vehicles and the large number of buyers," said Martin quoted by the Daily Mail, Tuesday, September 28.

Martin said that the increase in the price of used cars was also due to the large amount of spare money owned by the upper middle class. The reason is, the budget that is usually used for vacations at this time has to be restrained due to the outbreak of the COVID-19 pandemic.

Therefore, continued Martin, most people spend the money to buy used cars. According to Martin, now is the right time for people who want to sell their cars.

"If you have a car you don't need, now is the time to sell it," he said.

For your information, the world automotive industry has been hit hard by the shortage of semiconductor chip supplies since early 2021. As a result of this condition, most car manufacturers have cut production.

Not only that, the limited stock of semiconductor chips has even caused the price to soar up to 600 percent. The existence of a regional quarantine policy or lockdown to break the chain of spread of the virus has made the situation even worse due to delays in distribution.

Toyota cuts production by 40 percent

Previously reported, Toyota plans to cut world car production by 40 percent starting in September 2021. Due to the shortage of semiconductor chips supply, there is no sign of abating. Conditions have been made worse by the lack of a resurgence in the world automotive industry, which has been hit hard by the COVID-19 pandemic.

"After being forced to close factories last year due to the pandemic, automakers now face stiff competition from the broad consumer electronics industry for chip shipments amid global supply chain disruptions," the company said in a statement.

The outbreak of COVID-19 and the regional quarantine policies in Japan, the Philippines, Thailand, Vietnam, and Malaysia have also hit production even more. Because, most of Toyota's factories are in that country.

"The company will cut global production for September by two-fifths from its previous plan, affecting 14 factories in Japan and elsewhere, including most of its plants in North America," he said.

For your information, due to the scarcity of chips also hit the automotive industry in the UK. In fact, this problem has caused car production to plummet to its lowest point since 1956. Executive Director of the Society of Motor Manufacturers and Traders (SMMT), Mike Hawes said British car manufacturers are still facing very difficult conditions.

Recorded in July, production was only 53,400 units or decreased by 37.6 percent compared to the same period in 2020. Although the demand for new cars is still high, said Mike, manufacturers cannot fulfill it due to supply chain constraints from overseas for car components due to the lockdown policy. .