Used car prices continue soaring due to chip shortage

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(Source: Getty)

The unlikely victim of the COVID-19 pandemic has been the manufacture of microchips and the shortfall is pushing up the price of used vehicles.

Used vehicle prices in Australia have risen 37% from pre-pandemic prices due to the forced shutdown of chip factories due to the pandemic.

Now, chipmakers have warned that the chip shortage is expected to continue for some time to come.

How chips and cars are related

Chip factories in many countries have been forced to close due to the pandemic, which means many new cars, which are packed with new technology, cannot be completed.

In turn, this has led to an increase in the cost of used cars as there is a shortage of everything new in the market.

And the trend is expected to continue, the boss of network giant Cisco, Chuck Robbins, he expects the microchip shortage to last for most of this year.

“We think we still have six months to get through the short term,” he said.

“Suppliers are building their capacity. And it will get better and better over the next 12-18 months. “

A by Michael Brisson, senior economist at Moody’s, found that Australian used car prices jumped 5% in the first quarter of this year.

What else will this affect?

It’s not just automakers that have been hit by the shortage of laptops, gaming equipment, phones, televisions and more, all feeling the pressure.

Consumers are likely to face price hikes and product shortages for anything that requires a microchip until factories are able to meet global demand.

The problem was also recently compounded by the Suez Canal crisis, as Ever Given blocked chips going from Asia to Europe.

Large companies like Apple and Samsung have been forced to delay production of some products as the shortage continues.

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