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Used vehicles worth more than ever as new car inventories near bottom

New cars are in short supply because of the microchip shortage, and used cars are holding their worth for the exact same reason.

SOUTH ST PAUL, Minn. — If you are in the driver seat of deciding what to do in the car market right now, you aren't alone.

You know the basic facts: New cars are in short supply because of the microchip shortage, and used cars are worth more than ever for that exact same reason.

So, what to do? 

Andrew Walser has 17 dealerships in the metro. KARE 11 spoke with him Tuesday to ask that question.

Car inventory levels are down 64% over last year. Car lots that are full, are full of used ones — not new. The same is true for Walser Subaru in South St. Paul. 

"Well, at this store I think (they're) all pre-owned because they have zero new cars on the lot," Walser said. "Even those out there — all Subarus, all pre-owned." 

Not one new car that is for sale to drive off in. So, is this the bottom? 

"Now, finally, we are starting to see this is the bottom, so getting closer to the end," Walser said. "Bottom in terms of lowest supply of inventory we will have." 

Walser says "they've" been calling it the bottom for six straight months.

"It's not because they aren't trying to be honest with us; it's that they actually don't know," he said. 

The "they" Walser is speaking of are the manufacturers — the people who make the cars. From month to month, or even day to day, they haven't been sure how many cars they can get to car lots. But, as Andrew said, it may be starting to stabilize; however, it could still be awhile before things get back to normal.

"But now, at least, the information is lining up from each manufacturer so we are actually starting to feel that it's becoming a little more consistent, which means that it's going to take a year and a half," he said.

But there is another thing consumers need to know about the next year and a half. 

"How long is my used car worth a lot of money? I don't have a crystal ball," Walser said. "I would tell you that probably a year and a half; a year and a half of lower supply conditions at dealerships across the nation." 

If you own a car, it could hold its appreciated worth for a while. And if you own a used car and want a new one, he says new are selling, sure — but at 20% less than before. You just don't really "see" those sales the way you used to. 

"And what you don't see is the new cars that are selling right away because they are not ending up sitting in a lot; they just get offloaded off a big eight-car hauler and they end up in someone's driveway," Walser said.

And that may be the future: Lots are less full of new cars waiting for buyers. Instead, it could be buyers ordering new without ever seeing a day on the dealer's pavement. 

"We are at the bottom and we are slowly going to work our way up," Walser said.

A dip in new car sales are happening worldwide. For example, new car sales are down 17% from last year in China.

Kelly Blue Book found nearly half of all vehicle shoppers right now are pressing pause, saying they will wait up to a year to get back into the market of buying new or used.

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