The Great Shortage - Romans International

The Great Shortage

We’ve all noticed strengthening prices in the car market of late. Tom from Romans International discusses why.

Written by: Tom Jaconelli

It wasn't that long ago that we were all complaining of a saturated supercar market, too many cars, too many models and tumbling values. How times can change! What we are witnessing right now is the complete opposite, a mass shortage of cars, very few new models actually coming through and values are on the rise.

One of the main reasons for this is a global shortage of microchips which has completely stifled new car production. Microchips are essential components of the modern car, found in the latest digital infotainment displays, in electric seats, or even in the mode switch on that carbon steering wheel. If we rewind to a year ago when the pandemic first struck, not only did car factories partially close down but so did the semiconductor factories which produce these microchips. With home technology experiencing an unprecedented global boom led by the release of the new PlayStation 5 and Xbox Series X, the demand for microchips went through the roof and it has created a supply shock.

The used Porsche market has been absolutely flying with prices increasing over the last 3-4 months.

Resurgence of interest in these models with prices firming up.

As new car orders pick up again, the semiconductor factories (not helped by a huge fire at one of the main factories) are unable to keep up with the demand causing a huge backlog, and from what I'm hearing, there are thousands of cars built which cannot be completed due to not having the necessary microchips. With people looking for a feel-good factor this summer and holidays still off the menu, combined with lots of savings and disposable income around, it’s no surprise that upgrading the SUV or buying a supercar is the top of many people’s wish list. The problem is that, if you're looking to order brand new, then you are likely going to be faced with painfully long waiting times regardless of whether you are ordering the new G-Wagon, a 992 Turbo S or even a new Toyota Yaris GR. This is an industry-wide shortage and it's forcing people to buy pre-owned or consider a different model altogether. This is a huge factor contributing to what has become a very buoyant market for second-hand performance cars. Most dealers I've spoken to are experiencing unbelievably high demand and are really struggling to find enough stock to keep their forecourts and showrooms filled. The competition for stock has driven prices upwards, and with the lack of good examples on the market, there is probably no better time to sell your car. It’s safe to say it's a seller's market right now, but on the other hand, the shortage does mean it’s now more difficult than ever to find a particular car in the spec you want. We’ve honestly never experienced so many sourcing enquiries. More often than not at the moment, we're putting cars up for sale and they are sold within a matter of days or sometimes even hours, and often with multiple interested parties. This is down to a complete lack of choice currently available with people having to pay premiums over the list price even for some of the more run-of-the-mill models. If anything, it's the ultra-high-end hypercars which are probably the least affected. By their very nature, they pretty much always remain in short supply and new car production doesn't tend to have much bearing on values.

The question for many is whether this is just a brief purple patch in the market or can it continue? From what I'm hearing, the microchip shortage is going to continue impacting the manufacturers for the rest of 2021 and perhaps even longer. Whilst I expect the hospitality and travel industries to take a slice out of people's wages later this year as normality returns, personally I can see this strong supercar market continuing well into next year and beyond. @romansinternational

New showroom taking shape