Global Semiconductor Chip Crisis Drives Up Prices Of Entry-Level Cars And Creates Shortage Of Used Cars In The Brazilian Market

With the Arrival of the Semiconductor Chip Crisis in the Brazilian Market, Used Cars Are the New Darlings of Consumers, While Entry-Level Cars Are Being Devalued with a Fall Greater Than 10% in Sales

The semiconductor chip crisis is already impacting the stock of used cars in Campo Grande. The crisis has favored those selling their used vehicles, which are being overvalued due to increased demand, as entry-level cars—new ones—are becoming increasingly expensive. Prices are rising every month, and there is no forecast for values to stabilize, as factories are still facing shortages and inflation of semiconductor chips.

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The Impact of the Semiconductor Chip Crisis on Entry-Level Cars

Cars and more cars are waiting for these components to leave the factories. This is one of the main reasons for the absence of entry-level cars at Brazilian dealerships, and those who buy a new one wait months for the vehicle to arrive.

Semi-conductor chips are responsible for modern safety systems, air conditioning, entertainment, transmission, driver assistance, and lighting. With the pandemic, Asian manufacturers of this product had no buyers, as automakers were halting production, so they moved to other markets.

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Currently, the semiconductor chip crisis is making the product scarcer and more expensive. Thus, automakers choose to use more sophisticated components only in vehicles that already have a high price, so they can have a greater profit margin.

• Read Also: Semiconductors: Understand Their Importance to the Global Microchip Market

Sale of Used Cars Rises by 2.7%

Last month, 2,196 automobiles and light commercial vehicles were sold in Mato Grosso do Sul, which represents a decline of 11.27% compared to the same month last year, when 2,475 vehicles of this type were sold. In contrast, the sale of used cars increased by 2.7% in the same period, rising from 11,411 to 11,714, according to the National Federation of Automotive Vehicle Dealers Associations (Fenauto).

Mateus Stheefano, a sales consultant at one of the dealerships in Campo Grande, states that, “since the semiconductor chip crisis, entry-level cars no longer have some options that distinguished them.”

Prices Will Continue to Rise

The trend is that prices for entry-level cars will continue to rise month by month due to the semiconductor chip crisis. The used car lot of Giovel Automóveis, which previously had about 60 cars, currently has no more than 14, according to the owner, Ronaldo Ribeiro.

According to the owner, new consumers offer their used cars as a trade-in when acquiring a new vehicle, but with the drop in sales of entry-level vehicles, the lot is having difficulty replenishing the stock. Ribeiro states that prices may normalize around next year.