How Inflation Affects Buying New and Used Vehicles

Things to Keep in Mind Looking at Used and New Cars for Sale in Houston

The past couple years have been highly unusual for the automobile industry.

As everyone knows, we experienced a worldwide pandemic. That pandemic had far-reaching effects on virtually every industry from healthcare to manufacturing, to retail, and especially the service industry.

One of the big impacts that the pandemic caused is the significant slowdown on the supply of semiconductor chips that are used in vehicles. These chips play a big role in a vehicle’s features and functions, including touch-screen infotainment systems, the air conditioning, airbags, seat belt tensioners, and far more beyond that.

With the semiconductor chip shortage, this also meant that fewer new vehicles were being released onto the market. In fact, some manufacturers decided to move ahead with the release of their vehicles without the entirety of their feature package, with the promise to install them when parts became available. The supply chain issues have caused major problems in the automobile world.

With the limited supply of new cars for sale in Houston and nationwide, supply and demand laws dictate that new cars now come at a premium. The years 2021 and 2022 have seen a major bounce-back in demand for both new and used vehicles, which has significantly affected the price in both categories.

The Effect of Inflation on Used and New Car Dealerships

In addition to supply chain issues, semiconductor chip shortages, and vehicle shortages, drivers also must consider inflation. In 2021 alone, consumer inflation rose a record 7 percent, which is the largest increase that the nation has seen in over 40 years, according to the U.S. Labor Department.

However, that 7 percent figure is the average for everything. When looking at the category of new vehicles specifically, Fortune Magazine reports that new car inflation has risen 12.6 percent in the past year. Additionally, Fortune reports that used car prices have risen 16 percent over the course of the past year. This all adds up to the new and used car industry looking very different than it did two years ago.

People are now able to sell their used cars for more than ever before due to such high demand.
They’re also changing the way that they shop for new and used cars, often relying on online sites that allow them to sort by price.

Additionally, more people than ever before are pre-ordering cars to ensure they get exactly what they want without having to compete with other buyers at new car dealerships. In fact, many VW Clear Lake customers are utilizing this very same tactic in regards to the Volkswagen ID.4 using the build and reserve function.

Will the Effect of Inflation Ever Wear Off?

According to U.S. News & World Report, the prices of used cars will eventually drop. That’s the good news. The bad news is that this is going to be a very slow and deliberate process. It’s not going to drastically improve overnight.

When used car prices begin to drop, it will be extremely slow. It’s also worth pointing out that many people who had been waiting on the sidelines to buy a used car might keep those prices from sinking. The verdict: don’t try to play the waiting game if you have a truly urgent need to replace your current vehicle.

Regarding the price of new cars, there doesn’t appear to be any encouraging news on that front. The current new car prices may very well be part of our new normal; only time will tell. If you’re in the market for a new car, your best bet is to focus on qualifying for a low interest rate on your loan, a low monthly payment, a great warranty, and getting the most that you can for your trade-in.

Considering the Cost of Ownership of Used and New VW Cars

It also behooves buyers to look into vehicles that have low cost of ownership. That applies to the sticker price, gas mileage, and the cost of repairs over the life of the vehicle.

According to an article released by Endurance that covers the top car makes that cost the most to maintain, brands like BMW, Mercedes-Benz, and Cadillac all ranked at the top of the list. VW, on the other hand, has such a historically low cost to maintain that its name doesn’t even appear on their list.

Additionally, VW offers what’s called Carefree Coverage on all late model vehicles. The coverage breaks down as follows:

• 2 yrs. Service – Scheduled Carefree Maintenance (2 years or 20,000 miles)
• 3 yrs. Help – Roadside Assistance (3 years or 36,000 miles)
• 4 yrs. Coverage – New Vehicle Limited Warranty (4 years or 50,000 miles)
• 5 yrs. Access – myVW Remote Access

When you visit the VW service center for maintenance or repairs, Carefree Coverage will appear in your records, making the process simple and easy.

Ready to Shop for Used and New Cars for Sale in Houston? Visit Your Volkswagen Dealer at VW Clear Lake!

Although we can’t personally control inflation, what we can do is offer some of the most competitively-priced new cars for sale in Houston. For instance, the 2022 VW Jetta clocks in at a starting MSRP of around $20,000. To make the cost of ownership even more alluring, the Jetta gets 29 mpg city and 43 mpg highway.

Or perhaps you never want to deal with fuel pumps ever again. In that case, the VW ID.4 can provide up to 275 miles on a single charge (for the pro model). It’s also one of the most affordably-priced electric vehicles on the market. It has a starting MSRP of $37,495 (as low as $29,995 after a potential federal tax credit).

The best way to check out the best new cars for sale in Houston is by stopping by our dealership here at VW Clear Lake, conveniently located at 15100 Gulf Fwy in Houston. You can also give us a call at a target=”_blank;” title=”(832) 432-7969″ href=”tel:+1-832-432-7969″>(832) 432-7969 or e-mail us directly using the contact form on our website.

We also carry a wide variety of affordable used cars and certified pre-owned vehicles that have undergone a 100+ point inspection. Don’t forget to check out our specials for more great deals on VW products and services.

Are you a current VW owner in need of routine maintenance, repair, or service? Contact the VW service center today to book your appointment.

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