Global demand for cars is outstripping supply, and automakers want to keep it that way. The average monthly payment for a new car in the US has nearly doubled since 2019, while the price to buy outright has increased by 30%, with the same trend holding when it comes to used cars, reports Bloomberg. Automakers are eager to keep inventory low and prices high to reap the benefits of selling fewer but more expensive vehicles. Last year, nearly 13 mn cars were sold in the US, an 8% drop from 2021, yet Ford saw a 4.4% rise in their y-o-y gross income and General Motors adjusted earnings grew by USD 200 mn. And the automotive crisis is being felt worldwide, including in Europe, Japan and China, where the ability to purchase cars is affected by rising prices, vehicle shortages and a driving push towards more expensive electric vehicles. Here at home, car sales have rapidly fallen on the back of global supply constraints and Egyptian import restrictions.

The global supply chain issues that triggered a shortage of semiconductor chips, crippling car manufacturing, are gradually easing. Margins are expected to ease up in favor of consumers in 2023, and major manufacturers like Ford are anticipating new-car prices to fall by 5% as automakers “dial up” price reductions, says Ford’s CFO John Lawer. Dealers, however, are skeptical that manufacturers will increase inventories. “They all talk about 30 to 45 days’ supply of cars. They won’t do it,” one dealership owner said. “These (semiconductor) chips aren’t a big issue any more. Car wars are back.” As wealthy families secure more cheaper car models or are able to foot the bill of expensive cars, owning a car is likely to become a sign of wealth, Bloomberg notes.

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A lack of storage space could spur even more price inflation in the US, CNBC writes. Demand has slowed down because of inflation, causing a pileup of goods at warehouses — and therefore driving up the price of storage. These backend cost increases are more than offsetting the cooling of prices customers were expecting to see on the back of a drop in ocean freight rates and transportation. The warehouse shortage has pushed US storage pricing up 10.6% y-o-y in 2023 so far, CNBC reported, citing WarehouseQuote data. Overflowing warehouses have forced suppliers to store their products in cargo containers used for shipping, which adds another cost that suppliers pass on to their customers, triggering further price hikes and a supply chain bottleneck waiting to happen.