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A Look at the Auto Market for 2022

Over the past two years, the auto market has been experiencing unprecedented change, from shortages of semiconductor chips to shifts in consumer behavior. And 2022 is also shaping up to look different from historical norms. Here are some trends and developments to watch in the year ahead.

INVENTORY CHALLENGES
The ongoing scarcity of semiconductor chips and pandemic-related global supply chain constraints are continuing to affect the market thus far this year. Combined with an increase in demand driven by cuts to new car production since 2020, dealer inventory is dramatically limited while prices remain on the high end for most new vehicles.

MODEL AND FEATURE LIMITATIONS

With manufacturers struggling to keep up with demand, automakers are choosing to prioritize the most popular models with the highest profit margins, resulting in fewer models being available. To conserve the semiconductor chips needed to operate vehicles, automakers may limit the availability of vehicle features such as in-lane sensors and heated seats.

INCREASES IN DEMAND FOR USED VEHICLES
Production delays and selection limitations in the new vehicle market have led to increased consumer demand for used vehicles. Additionally, many motorists who lease their cars are choosing to buy out their lease at the end of its term, adding to the inventory deficit. Because of these factors, the depreciation of used vehicles has slowed significantly, which is a silver lining for vehicle owners who are ready to sell.

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