TrueCar’s Mike Darrow says car sales could pick up later this year

  • The combined pressures during the pandemic have seen the limited availability of new cars push used car prices to record highs.
  • Some analysts believe the used car market peaked at the end of 2021, and as more new cars become more readily available, these historic prices will drop.
  • TrueCar collects new and used car data from over 15,000 dealerships to compile their information and help buyers make car buying decisions.

    Record inflation. Supply chain issues and shortages of critical parts and computer chips. And in almost unprecedented ways, some used cars sell for more than new cars.

    The start of 2022 has not been easy for the automotive industry, but there is reason to be optimistic the retail market will recover by the end of the year, or sooner.

    “All of our data shows us that we bottomed out at the end of the fourth quarter (in 2021), and we believe the first half of 2022 will be a gradual build – inventory will slowly start to build,” Mike Darrow, president and CEO of TrueCar, said Automatic week ahead of last week’s opening of the 115th Chicago Auto Show.

    “Now you’re going to get spring market demand, so any additional supply is going to be gobbled up pretty quickly,” Darrow said.

    Based in Santa Monica, California, TrueCar is an automotive pricing and information website for new and used car buyers. Darrow, who joined the company in 2019, said many of the issues plaguing the industry are already moving to the rearview mirror.

    TrueCar collects data from over 15,000 dealerships to allow users to see what other car buyers are paying for vehicles in their area and then receive upfront prices for any purchases they are considering. It collects information on new and used car sales.

    Two years of U.S. vehicle sales negatively impacted by a pandemic and parts shortages have created significant pent-up demand.

    “There’s a demand bubble being created because consumers are coming back to the market in record numbers and they can’t find the vehicle they’re looking for,” Darrow said. “I think when some of these short-term macro issues are resolved, the demand will be there very, very quickly. People will be ready to buy.

    The chip shortage was triggered when automakers halted vehicle production as the pandemic hit US shores in March 2020. When automakers temporarily waived ordering chips – the brains of modern vehicles – that ability was quickly gobbled up by consumer electronics producers, like Apple and Microsoft.

    truecar ceo and president mike darrow
    TrueCar’s Mike Darrow.

    TrueCar

    “OEMs have gone to the back of the line for chips,” Darrow said. “When they wanted to come back, the supply wasn’t there.”

    The shortage of new cars has caused an explosion in used car sales, with prices increasing by more than 50% in some cases, even with high mileage and certain wear and tear.

    jeep wrangler at the chicago auto show
    Jeep Wrangler Rubicon descends a steep hill at the Chicago Auto Show.

    Chicago Auto Show

    While Darrow sees the new car market coming back strongly by the end of this year, he also sees the used car market remaining strong, perhaps longer than it will take for the new car market bounce back completely.

    “For new car buyers, about 20% of people who come to our site looking for a new car end up buying a used car and they buy CPO (certified pre-owned) models,” a- he declared. “They’re buying current models, low-mileage models, so we think the used-car market will continue to serve those people for an extended period of time.”

    As a result, used car prices are expected to remain high until new car sales increase significantly. “When new cars come back on the market, their prices (MSRP) will go down,” Darrow said. He expects used car prices to follow next, likely in the second half of this year.

    Car buyers at the Chicago show can narrow down their consideration list and then visit TrueCar to calculate a monthly payment and get a value for a trade-in vehicle. In Florida, the company is testing a complete end-to-end digital solution called TrueCar Plus.

    Big changes are coming for automotive manufacturing and retail as battery electrics and hybrids grow in popularity and technology advances with driver assistance technologies that lean towards driving. autonomous.

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    The impact on physical car dealerships cannot be overstated. Some dealers may drop out rather than adapt, but Darrow remains optimistic about the future for dealers and buyers who will find them useful, especially for vehicle maintenance, closing sales and perhaps recharging. electric vehicles.

    “A lot of people still want to get into a dealership,” he said. “They want to touch the car, they want to sit in it, drive it. So we see dealerships playing a major role. They will have digital processes for consumers to use, but I think they will also support their physical model as it progresses.

    Share your thoughts on what you think the new and used car markets will look like over the next year in the comments below.

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