40 Percent of New Car Buyers are Willing to Pay a Big Markup
Consumers in Canada and the U.S. are paying the price for tighter vehicle stocks resulting from increased demand since the pandemic as well as the ongoing global chip shortage that causes delays and interruptions at many assembly plants.
Most are aware of the situation, and it appears nearly half don’t mind spending more than they should if it means a quicker delivery.
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Research conducted by Kelley Blue Book during the last week of April shows that four out of ten buyers would pay a 12-percent premium above the manufacturer’s suggested retail price (MSRP). Considering that the average new vehicle price in Canada right now slightly exceeds $40,000, that means consumers are willing to pay about $5,000 over sticker price.
Almost as many buyers (37 percent) plan to postpone their purchase until things return to normal. The others are undecided.
The study reveals that 87 percent of consumers recognize the chip shortage is impacting automakers, and 73 percent expect to face higher prices at the dealerships as a result. Only 23 percent of new-vehicle intenders are willing to switch their purchase intention to a used vehicle. Fewer are willing to shift segments.
According to some market analysts, the effects of the chip shortage will endure in 2022 and possibly beyond, so more delays in production will follow. Consulting firm AlixPartners estimates automakers will lose $110 billion USD ($133 billion CAD) in revenues this year, as it predicts the crisis will hit the production of 3.9 million vehicles.
