Americans should be cautious before buying a car amid high prices and low inventory within the automotive industry, Rodo CEO Nathan Hecht said in an interview with Yahoo Finance.
“I think the only reason you buy into this market today is if you really need a car,” Hecht said. “As we get into September, October, November, new car inventories should start to replenish, not to their normal levels, but just replenish as factory output increases.”
Demand for both new and used cars is on the rise in 2021, and bottlenecks in the supply chain along with other production issues have caused an imbalance in supply and demand. Accordingly, prices skyrocketed earlier in the year, with used car prices remaining high in light of an ongoing semiconductor chip shortage.
Faced with the reality of higher used and new car prices, many consumers have turned to leasing, a trend that’s become more popular within the past five to six years with younger people entering the auto market, according to Hecht. And the recent price inflation merely accelerated this change.
“As younger consumers now come online as well, their tendency is to hold onto things for a shorter period of time,” Hecht said. “And definitely, as we think about pricing as it is right now, you may want to get something for a shorter period of time and wait until the market calms down a little bit before you commit to something for the longer term.”
Hecht’s company, Rodo, is an online service for customers to buy and lease cars. Rodo was founded in 2016 under the name Honcker and changed to its current moniker in 2019. The company also allows users to sell their own cars or trade them in for profit on the platform.
One of the main goals of the service is to eliminate inconveniences associated with in-person purchasing of cars at dealerships. “Consumers really come to Rodo to never walk into a car dealership,” Hecht said. “So for us, you know, the market is really healthy right now because consumers need more choice. They want to see a broader array of inventory, maybe from dealers that are not necessarily that close to them… The marketplace dynamics of Rodo will still allow you to find the car competitively priced.”
By the late fall, Hecht said, a market correction should begin to take place; however, consumers may do well to wait before expecting prices to come down.
“It’ll take some time until we start to see this normalization really take place,” he said. “Time could mean anywhere from six to the next eighteen months or so.”
Ihsaan Fanusie is a writer at Yahoo Finance. Follow him on Twitter @IFanusie.
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