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Fox Business’s Gerri Willis Reports New Car Shortage and Global Chip Crunch Are Creating Strong Demand for Used Car Market
Strong auto demand shows no signs of slowing down, according to AutoNation CEO Mike Jackson.
Consumer demand for personal transportation has increased during the COVID-19 pandemic, with Americans preferring to travel in their own vehicle rather than taking public transit or carpooling. Demand was also supported by several rounds of government stimulus checks and ultra-low interest rates.
| Teleprinter | security | Last | Switch | Switch % |
|---|---|---|---|---|
| A | AUTONATION, INC. | 106.34 | +3.74 | + 3.65% |
“Consumers buy vehicles before they even arrive in our stores,” Jackson said during AutoNation’s second quarter earnings call Monday. “We expect the current environment of demand exceeding supply to continue into 2022.”
The auto market has faced serious upheavals in the wake of the pandemic, as lockdowns aimed at slowing the spread of COVID-19 resulted in a shortage of semiconductor chips.
The chip shortage forced automakers to shut down factories, driving demand in the used car market to the point where prices for used vehicles were almost as high as those for new models.
THE PRICES OF USED CAR TOWARDS THE INFLATION OF THE PRESIDENT OF THE FED POWELL
The 30% year-over-year surge in used car prices in May caught the attention of Federal Reserve Chairman Jerome Powell, who last month attributed the increase to a “perfect storm. very strong demand and limited supply “.
He said he thought the price increase was temporary, but didn’t know when it would reverse.
AutoNation’s Jackson, who was 2018 chairman of the Atlanta Fed board, said Monday he too expects the recent price gains to be “transient” and things ” will look different “by the end of the year. Jackson noted that manufacturer shipments were up 100% from a year ago and down just 6% from 2019 levels.
AutoNation, based in Fort Lauderdale, Florida, reported second quarter net income of $ 385 million, a record $ 4.83 per share. Revenue increased 54% year over year to a record $ 7 billion.
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From the start of the year through July 15, the company repurchased 12.9 million shares, or 5% of the outstanding shares, for $ 1.2 billion. The board of directors authorized an additional $ 1 billion in buybacks on Monday.
AutoNation shares are up 47% this year through Friday, compared to the S&P 500’s 15% gain.
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