With fewer cars on the lot due to chip shortages, and car sales on the decline, aftermarket audio sales appear to be benefiting, say retailers.
Last summer a new car cost $41K on average. Only five months later, at the close of 2021, the cost had surged to over $45K, said J.D. Power. By comparison, before the pandemic, the average price of a car was $36K.
Annual car sales are expected to drop from 14.3 million a year ago to 13.1 million cars this year (excluding fleet sales).
Car audio dealers are seeing a ripple effect. Performance Auto Sound, WA estimates from 10 to 15 percent of its customers are those who would have bought a new car at this point. Instead, these customers are fixing up their present vehicle.
Foss Audio & Tint, WA also says about 15 percent of the chain’s customers were thwarted from buying a new car and are instead looking to upgrade audio and other features. “It’s crazy to buy a new car today,” said Ed Weber.
919 Motoring’s Shaun Reilly said,”I had a client here yesterday that said a Toyota dealership was tacking on $20,000 for a new Tundra.” The North Carolina based retailer estimates as much as 75 percent of its customers have been prevented from buying a car either by high price or low availability and are turning to the aftermarket for upgrades.
Even expeditors who sell to car dealers, say the lack of new cars hasn’t seemed to hurt sales in many cases.
Titan Motoring, TN is both an expeditor and retailer. Sales are so strong it’s impossible to tell if the car shortage is even having an impact, said Dan Bowman. But the shortages have put Titan in the role of helping some of its customers to order a new car. Since there’s less of a choice, the customer and Titan will discuss what trim levels are available and what upgrades can be done through the shop instead of buying a higher trim level that may not be available.
American Radio, GA works with over 100 car dealerships in multiple states. Sales have been strong despite lower car sales. February sales were up over last year. But VP Scott Fricker has seen a softening in sales over the past two weeks, which he says may be attributable to higher gas prices.
The same chip shortage that’s causing the shortage of cars, might also work in the expeditor’s favor as some cars are shipping without key features such as heated seats.
Fricker said, “When Ford and Nissan announced they weren’t going to put heated seats in cars, we thought we would get a substantial amount of business, but we didn’t get anything. But with this last announcement with GM not having seat back monitor features, it’s been very good business… if the dealers have cars.”
A couple more facts: car dealers have doubled their fees for a new car on average to over $5K, says The Car Connection. Used car prices are now 28 percent higher than a year ago, at an average sale price of over $28K, said Kelley Blue Book.
