Recently, the car price in Australia has increased significantly. The pandemic has brought about several unprecedented economic and logistical challenges impacting the automotive industry. The reasons for the increase in car prices are numerous and complex, and it is essential to understand them to make informed decisions. In this blog, we will explore the major factors that have contributed to the rise in car prices in Australia. So, if you are in the market for a new car and wondering why prices have gone up, keep reading to find out.
Shortage of Critical Car Technology
One of the root causes of inflation can be traced back to a global shortage of semiconductors – the tiny yet critical chips that are used in modern cars for safety features, power management, and displays. The impact of this shortage has been profound, causing several logistical and economic issues within the industry. Due to the pandemic, the demand for electronics skyrocketed, leading to a shortage of microchips. This continued supply issue of new vehicles into Australia (causing many vehicles to take 12 months to arrive) has cause the price of used vehicles to skyrocket.
Supply Chain Disruptions
The COVID-19 pandemic has disrupted global supply chains, causing delays and shortages of key components needed for car manufacturing. Many manufacturers had to shut down their factories due to lockdowns and travel restrictions. This has resulted in higher costs of production and increased car prices.
Increase in Car Demand
Despite the pandemic, there has been an increase in demand for cars due to several factors. The low-interest rates at the time have made it easier for people to afford a vehicle, and the need for personal transportation has increased. Moreover, many people prefer private vehicles over public transportation, which has led to a surge in demand for cars. This increase in demand has led to an increase in used vehicle prices.
Raw Material Costs
The cost of raw materials, such as steel, aluminium, and plastic, has been increasing globally due to several factors, including increased demand, supply chain disruptions, and economic conditions. These raw materials are essential components in the manufacturing of vehicles, from the car’s frame to the interior and exterior components. As the cost of these raw materials increases, it directly affects the cost of production of cars, leading to higher prices. Restrictions on the movement of goods and people have led to delays and shortages in the supply of raw materials, causing further disruption in the production of cars.
Government Regulations and Policies
Governments around the world are implementing stricter emission and safety regulations for cars. This requires automakers to invest in newer technologies to comply with the regulations. This has increased the cost of production, which has led to higher car prices.
What Should You Do If You Are Looking to Purchase a Car?
If you are looking to buy a car amidst these challenging conditions, it is crucial to do your research. With the shortage of new cars and the rise in prices, finding a good deal may take longer than usual. Here are some tips that can help you navigate the current market:
- Consider alternative car models: With the shortage of microchips, some car models may not be available or may have longer waiting periods. Consider alternative models or brands that may have shorter waiting times and lower prices or consider a used vehicle.
- Shop around: Check with multiple dealerships to compare prices and availability. You may find that some dealerships have better deals or incentives that can help you save money.
- 3. Get pre-approved financing: With the rise in car prices, getting pre-approved financing can help you stay within your budget or at least allow you to understand the market better and make the buying process easier. EZPZ Finance can help you get pre-approved Car finance and assist with the buying process including what you should and should not do.
The rise in car prices is a complex issue that requires a proactive approach to what most may be used to, when buying a car. At EZPZ Finance, we are committed to helping you navigate the current market by offering a flexible financing experience, by listening and understanding what your need are first we have a better understanding and an in-depth approach to helping you into that next vehicle.
Our team has extensive industry experience and access to a network of over 40 lenders, ensuring that we can find the best suitable solution for your unique financial circumstance. If you are looking to purchase a car in today’s market, EZPZ Finance can help you find a suitable financing option and assist you with your car search.
Enquire now and let us take the stress out of car financing, so you can focus on finding your dream car.