So many people were working remotely for most of 2020, that there was a definite decrease in traffic on the road. People saved mileage and money. There was nowhere to Uber to, though food delivery skyrocketed. The auto industry has shown some interesting data as the world moved towards opening! It started in April and May of last year when U.S. automakers were forced to close factories for eight weeks to help stop the novel coronavirus from spreading. That cut production, limiting inventory even as demand remained surprisingly strong. The situation is as such, the cost of transportation affects business in general. All the restrictions during the beginning of the pandemic made an unexpected difference in the global economy.
Pre- covid time, Millennials and Gen-Zers, so the argument went, were going to swerve away from car ownership as more of them moved to cities with myriad public transport options and ride-hailing services like Uber. Besides, concern about the adverse impact on the environment would deter young people from making purchases. Then the pandemic hit. Now, as the world recovers, used car prices are going through the roof. Waiting times for driving tests have blown out. And online requests for driving directions are soaring, while public transit route inquiries have plunged. An EY survey of 3,300 consumers in nine countries found that 32% of non-car owners said they intended to get a car in the next six months. About half of those prospective buyers were millennials.
Vehicle sales dropped again in June, the second month in a row of declining vehicle sales, as rising prices and shortages keep would-be buyers away. Imported vehicle sales fell 13.1% from the previous month while domestic vehicle sales also declined, down 8.7% overall as auto sales shrank 11.2% and truck sales fell 8%. The declines dragged car sales to below their pre-pandemic level. A shortage of semiconductor chips, which are essential components of new cars and trucks and most of which are imported, has reduced the production of new vehicles and pushed used-car prices to record levels. New, a typical 2019 Toyota Tacoma SR double cab pickup came with a sticker price of just under $29,000. Two years later, dealers are paying almost $1,000 more than that to buy the same vehicle, even though it is used, and are reselling it to consumers for more than $33,000.
As the U.S. economy struggles to emerge from its pandemic-induced hibernation, consumers and businesses have encountered product shortages, hiring difficulties and often conflicting public health guidance, among other challenges. Reflecting the increase in crude prices, the average price of a gallon of regular gasoline in the United States has risen to $3.13. Asked about oil prices at a White House news conference on Tuesday, Jen Psaki, the press secretary, said the administration was monitoring the situation and had been in touch with officials from Saudi Arabia and other major producers. But she suggested that the president had limited control over gas prices. “There sometimes is a misunderstanding of what causes gas prices to increase,” Ms. Psaki said. “The supply availability of oil has a huge impact.” A year ago, as the coronavirus kept people home, gas cost just $2.18 a gallon on average, now it’s $3.05 and here in California, it is over $4.00. The auto club said on Tuesday that it expected prices to increase another 10 to 20 cents through the end of August.
We will see how the opening of business reflects on both traffic and the car industry. In my quest for knowledge, I found depending on what car you have bought, it might be best to keep it!