CrossCheck Blog

Much has been made of the inventory crunch in both the new- and used-car markets. The Covid effect has been especially difficult for the auto dealer industry as thousands of new cars are sitting idle, waiting for computer chips that continue to be in extremely low supply. Auto Repair shops are taking note as customers delay buying a new car and instead look to maintain older vehicles.

According to a recent survey by LendingClub and PYMNTS, 61 percent of Americans report that they are living paycheck to paycheck. Perhaps the most astounding statistic to come out of the survey, however, is the fact that 48 percent of respondents making $100,000 or more also say they live paycheck to paycheck.

There are several factors to suggest prices for both new and used cars will continue to rise well into 2022 from the record levels already reached this year. At an average in 2021 of $45,000 for new cars and $25,000 for used cars - and rising - many consumers will likely find it either unpalatable or even impossible to buy a new car. That is great news for auto repair shops. CrossCheck can help seal the deal with sensible payment options as cash-strapped consumers will be increasingly likely to pay for repairs, rather than throw their older cars on the scrap heap.

A current study by the National Automobile Dealers Association (NADA) found that there is a serious shortage of car mechanics at dealerships, somewhere around 20,000 – 25,000 people. The trade group predicts that dealers will need another 46,000 more people by 2026. If you own or manage a dealership, this will keep you up at night, because today the parts and service area (aka “fixed ops”) comprises fully 49% of the dealership’s gross profit. It’s what keeps the lights on and pays the bills!

A consumer just found their dream car and believe they got a good deal from one of the local auto dealerships. Isn’t this one of the big things in life? Of course it is. Being a savvy shopper, this consumer knows the car depreciated 10 percent the instant they drove it off the car lot and that it will depreciate another 10 percent over the first year of ownership. They may also be aware that studies show it will lose about 10 percent of its value each year over the next four years. If one does the math, this means that after five years, it is going to be worth about half or even 40 percent of the original sale price. Many people, including me, find this to be a scary statistic.