(NewsNation Now) — Has your new car purchase been impacted by the semiconductor shortage? Are you worried about trade-in values? Do you have questions about electric cars?
Jerry Reynolds, host of the “CarProUSA” radio show, most likely has the answer to all your car questions. With 40+ years in the automotive industry, he is a trusted source of automotive news, insider insight and new car reviews.
Reynolds has seen and heard it all when it comes to cars, trucks — or anything that has wheels, for that matter. His mission is to educate consumers about the car-buying process and provide the latest information, so they can make the best car-buying decision — the second-biggest purchase most people make.
In his interview with NewsNation, Reynolds discusses some of the biggest questions he gets and shares some insider tips along the way.
CHIp shortages
The auto industry has been mercilessly impacted by the chip shortage, and this week Ford Motor Co. announced it’s halting production at eight of its plants because of global supply chain issues for well over a year. The semiconductor supply chain issue has been ongoing and as a result, new cars are in very short in supply.
“It’s really changed the auto industry,” Reynolds said.
The average car today has 1,400 chips in it. And it can be as many as 4,000 chips. There’s not one car on the market that doesn’t have any microchips in it. They control everything.
“So when COVID hit, automakers pretty much shut down the assembly lines because workers were getting sick,” Reynolds said. “And none of us knew what was gonna happen with COVID. So the chipmakers
started selling chips to the electronics firms — to computers and games and all the things that
use chips — and they’ve sort of abandoned the auto industry.”
Reynolds projects that, due to new chipmakers and new chips entering the market, the chip shortage outlook will be better by this summer.
“I do think by summer, things will be freer than they are now,” he said. “But there’s so much pent-up demand out there that, you know, if a bunch of chips do come in, they’re coming in on cars that are pre-sold.”
CAR VALUES
In the current market, it’s been a waiting game to buy a new car while used car prices have surged.
There’s really nothing consumers can do now to try to get ahead of the supply chain issues unless you have a trade-in, Reynolds says.
“It all comes down to if you have a trade-in,” Reynolds said. “If you can get 30% more for your trade-in today than you could have six months ago and only pay 11% more for a new car, hey, that’s just simple math.”
New car prices are up 11% and used car prices are up 38%, according to Reynolds. A lot of used cars are bringing more than their window stickers when they were new cars.
“If you don’t have a trade-in, you’re going to pay max for a vehicle,” Reynolds said. “If you have a trade-in, values are up more. But if you don’t, it’s probably the worst time in years.”
“People are not used to paying sticker price or more for the car that they want, but they’re having to right now,” he said.
Car buyers are also not used to waiting on a car when they make the decision to buy.
“It’s hard for people because they used to go into car dealers and see hundreds of cars,” Reynolds said. “Right now, most of those dealers have 10 cars on the lot, right? So they can’t see what they want.”
“We’re used to going in and getting it,” Reynolds said of the changes taking place at dealerships. “So it’s taken some patience on the part of the dealers and on the part of the consumers.”
Reynolds said that right now there are still some decent deals if a buyer is willing to order a car.
“There will be more inventory on the ground and decent deals if someone is willing to order a car,” he said.
Most of them are available in six to eight weeks, Reynolds said. And people can get exactly what they want at a decent deal.
“And that’s probably MSRP,” he said.
ELECTRIC CARS
Electric cars are a hot topic. Everybody’s talking about the influx of electric vehicles, but they have been hit disproportionately harder by the chip shortage because they simply require more chips.
“There’s a lot of electric vehicles coming down the line. They’re not here yet, but they’re on the
way, in the next year or two,” Reynolds said.
According to Reynolds, the biggest question for most people considering an electric vehicle is, “Can I deal with the range?”
Range pertains to how long a vehicle’s batteries will last before they start to diminish. Range anxiety is a real issue with people.
“If where you work has chargers and you can charge your car all day, that’d be great. But if not, then you’ve got to plan every trip around how much range you have. And there’s a lot of variables to that, especially with weather.”
Weather can cut range. When automakers and the EPA rate electric vehicles for range, they do so under perfect conditions.
But if you’re in cold weather, that’s going to cut your vehicle’s range by 20%, Reynolds said. If you drive a lot at night, just your headlights alone are going to cause an issue with range.
Electric vehicles are great for people with very short commutes, Reynolds said. But after that, they get dicey.
For this reason, most U.S. households should get one electric and one gas car, according to Reynolds.
“The future holds for most American households, probably one electric car and one gas car,” he said. “At least for the foreseeable future. And I’d call that the next 10 years.”
Reynolds said consumers should look at electric cars today like we looked at cellphones 20 years ago.
“They didn’t have very good batteries, they were big, they were heavy, they were bulky. They didn’t do a very good job,” he said. “We’re kind of there today with electric cars, but it will improve.”
“And down the road. I think electric will be a big, big thing. But I think the automakers are putting too much stock in electric cars right now. And they’re gonna flood the market in the next few years.”
“I’ve been there myself,” Reynolds said. “I reviewed a number of electrics just the Sunday after Christmas this year, I spent two hours in the parking lot of a hotel that had a charger just to be able to get back to work the next day.”
Reynolds recommends looking at hybrids because they’ll run on battery for 20-25 miles.
“If you have a short commute, that’s perfect,” he said. “Makes more sense for the vast majority of Americans.”
Toyota has probably found the best balance of hybrids of any automaker out there, according to Reynolds.
“They’ve got a hybrid version of almost every vehicle that they sell, and you can look at their sales numbers while everybody else is down. And even with the chip shortage, you know, they’re still doing quite well. So, you know, they’ve kind of got it figured out,” he said.
TIPS
Reynolds stressed that if you don’t have a trade-in and you don’t have to buy a brand new car right now, wait.
If you have a trade-in, he says, take advantage of the high demand for vehicles right now and make a move.
“You’ll come out way ahead on value,” he said.
Reynolds points out with SUVs being so popular right now — by far the dominant segment in the auto industry — buyers really do need to do a lot of research to find the right one.
“You really got to get out and drive these things to experience them and figure out what’s the best,” he said.
“Because competition in the SUV segment is fierce, people just need to know there are a lot of great choices,” he said. “Typically, I would tell people to go online and shop several dealers against each other, but right now, it’s not gonna help them. It’s just it’s a hard market out there. There are more buyers than there are cars by far. And that makes it tough for a consumer to get a deal right now.”
If you can wait to buy a new car, Reynolds said, “put a pencil to it.”
Figure out what your car payment would be, he said. Is it cheaper to buy a car now or is it cheaper to do what you have been doing with your existing vehicle? And don’t forget to fold insurance and gas into the equations, he said.
“What we’re seeing right now with the average price of a new car at $46,000, that’s going to come way down.” he said. “And it won’t be until there’s a lot of inventory, which I think we’ll start to see by summer.”
“People just need to try to hang on,” he said.
Want to ask Reynolds a car question? You can listen to “CarProUSA” on radio stations around the country listed here.
Watch the full interview with Jerry Reynolds in the video player at the top of the page.