Why are new and used car prices so high in Maryland and beyond? Blame a microchip shortage.

When Jeanette Coury and her husband shopped for a car in late May, it took only about a week to search online, test drive a 2018 Nissan Rogue and drive away the next day with a “really great deal.”

The Towson couple found themselves back in the market about a month later, after the Nissan was hit, then totaled. Searching for a similar SUV, they were shocked at how fast the market had turned on its head.


“The experience was the exact opposite,” said Coury, who went back online and made the rounds to the same dealers. “I knew what I wanted and I knew what I wanted to spend, and I couldn’t find a blessed thing.”

With thin inventory in both new and used vehicles, consumers are finding sparse selection, higher prices, longer than usual waits and little wiggle room for negotiating. Some vehicles cost thousands of dollars more than the manufacturer’s suggested retail price, or MSRP. Cars viewed online are sold in no time. Some popular used models are fetching more now than they did a couple of years ago.

Michael Phelps, a sales consultant at the Jones Junction car dealership in Bel Air, walks Wednesday through one of the empty new-car storage lots that is normally packed with cars.

Industry experts blame a worldwide shortage of semiconductor chips, necessary not just for car parts but for appliances and a range of consumer products.

“It’s supply and demand right now,” said Charlie Chesbrough, a senior economist at Cox Automotive Inc., the company behind Autotrader, Kelley Blue Book and other brands. “People want cars and the industry has been unable to give them to them. The market is starting to hit a brick wall in terms of inventory.”

That has meant “you can’t go to a dealer and find the vehicle you want or the color or trim you want,” Chesbrough said. “The dealer doesn’t want to negotiate on price. If you don’t want to buy it, there’s somebody behind you that will.”

“I knew what I wanted and I knew what I wanted to spend, and I couldn’t find a blessed thing.”

—  Jeanette Coury, auto shopper

High demand, low inventory

Demand has been fueled by pandemic-weary consumers looking to resume activities and spend stimulus money.

Inventory levels, meanwhile, were already low after factories closed during last year’s virus outbreak. This year, the chip shortage has “significantly” hurt vehicle production, “causing available supply to be at a critically low level,” Cox Automotive said in a July 27 report.

New-vehicle availability fell to a record low 25 days’ supply at the beginning of July, making it more difficult for a buyer to find the exact vehicle, type, color and trim they have in mind, the report said.

For Coury and her husband, weeks passed before they found a vehicle that met their requirements, a 2018 Hyundai Tucson.

Erick Lopez a technician in the detail shop at Jones Junction, works on cleaning a car that was a trade-in. Jones Junction car dealership in Bel Air has a shortage of new and used cars because of the microchip shortage stemming from the pandemic. This has led to record low inventories of both new and used cars and hikes in prices.  8/11/21

A salesperson promised to text them if someone bought it before they arrived at the dealership, and, to their relief, it was waiting for them. They had to spend much of the day waiting for a minor repair because the dealer had no similar vehicles but felt it was worth it. And they resigned themselves to having to pay $2,500 more than on a similar vehicle just weeks earlier.


“I feel for anyone who’s trying to buy a car now,” Coury said. “I feel like it’s getting worse.”

Broad impact

The supply chain struggles differ from past shortages that may have affected only specific manufacturers or certain geographic regions, said Peter Kitzmiller, president of the Maryland Automobile Dealers Association.

“I don’t think there’s a franchise or manufacturer that hasn’t been affected,” Kitzmiller said. And like everywhere else, “dealers in Maryland are extremely short of inventory.”

Much of the product that’s being shipped in is sold already, and for certain cars, buyers are lined up on waiting lists, Kitzmiller said.

Tracy Cioni was surprised to find the shortages extend to used cars. The small SUVs she spotted online were sold almost immediately to someone else.

We didn’t need anything new,” said Cioni, a personal trainer from the Wiltondale neighborhood of Towson. “I kind of thought that would help, but it didn’t.”


While out running errands, she and her husband got word of a Honda HR-V at a Parkville dealer. They headed over, took a test drive and bought it. Cioni said she’s glad they didn’t hesitate.

“We were lucky to find what we wanted,” she said. “It’s gotten progressively worse. You can see it when you drive down York Road. The car lots are half empty.”

The shortage is unfolding as the average age of cars on the road has climbed to a higher-than-normal 12 years, Kitzmiller said. That’s put more buyers in the market to compete for fewer choices.

Sales dip, prices climb

Too few products has caused the pace of sales to drop sharply over the last two months, and that could last through August and September, according to Cox Automotive.

For new cars and trucks, the seasonally adjusted annual rate — or estimate of sales for the year at the current monthly rate — dropped to 14.8 million in July, from 15.4 million in June. It was the third consecutive monthly decline, following a peak in April as the pandemic waned, and compares with an average of nearly 17 million units a month through May.

The supply of used vehicles has constricted as well, in part because fewer are trading in due to the supply of new cars, experts said.

A microchip shortage stemming from the pandemic has led to record low inventories of both new and used cars and hikes in prices. The shortages are being felt by most automakers and dealers, including Koons Toyota in Westminster.

The chip shortage stems from last year when automakers canceled chip orders and closed factories in March and April, assuming vehicle demand would fall during the pandemic. It did, for a while. By the time demand picked up in midsummer, the chips had been scooped up by makers of computers, gaming systems and appliances, said Jessica Caldwell, executive director of insights at the automotive website

“Demand [for chips] is at such a high level, we just don’t have the supply to keep up, so prices are higher,” she said.

The estimated average transaction price for a new vehicle in the U.S. hit a record-high $42,258 in June, analysts at Kelley Blue Book reported, up 6.4% or $2,527 from June 2020. June’s average sales price was 99.9% of the average manufacturer’s suggested retail price. By contrast, the average price in January represented 95.3% of MSRP.

Prices of used vehicles are setting records too. At the end of June, average listing price topped the $25,000 mark for the first time, hitting $25,101, according to a Cox analysis. The average used vehicle price has soared 26% since June 2020 and nearly 30% in two years.

That’s a silver lining for used car sellers or for those trading in popular models.

“You could have owned a car for two years and lost no money,” Caldwell said.


Inventory is especially tight for pickup trucks, which along with SUVs have grown in popularity, Caldwell said.

Shawn Fenwick a technician in the detail shop cleans the windows in a 2018 Nissan Titan that was a trade-in at the dealership. Jones Junction car dealership in Bel Air has a shortage of new and used cars because of the microchip shortage stemming from the pandemic. This has led to record low inventories of both new and used cars and hikes in prices.  8/11/21

Ford, for one, has struggled, reporting a 32% drop year-over-year in new-vehicle sales in July. At the end of the month, General Motors reportedly reacted to the chip shortage by temporarily halting most of its full-size pickup production.

Some foreign automakers such as Hyundai and Kia, based in South Korea along with most of the chipmakers, have fared better, Caldwell said.

Cox’s Chesbrough believes the crisis should start easing with increased chip production later this year. But lean inventory could persist through next year, he said.

“It’s going to take a while,” Caldwell agreed.

Slim picking, compromise choices

At Koons Toyota in Westminster, where the lot takes several hundred vehicles to fill, just a few dozen are on display.


“Toyota is not able to keep up with demand and get the supply going as quick as we want,” said Nate Snook, a Koons manager of new and used car inventory.

Prices vary, he said, with some at MSRP, some marked up and some discounted, depending on model and availability.

The popular Highlander and Venza SUV models, and even Camry and Corolla sedans, are often sold before they arrive, and the dealer has been taking orders for cars in production, Snook said.

“They’re selling before they get here,” he said.

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Customers have been more willing to compromise on model features, buying up or down on their preferred model, he said.

North Baltimore resident Rosemarie Carreras found fewer options earlier this year when she and her husband looked for a Subaru Forester to replace an older car.


“The colors I wanted, they did not have... nor were they getting it,” she said.

Instead of red, Carreras took an available model in pearl black, which she now loves, because “I knew that they didn’t have a lot of cars coming in.”

“I’ve been doing this 32 years, and I’ve never seen anything like it.”

—  Gary Hale, general sales manager at Jones Junction in Bel Air

Gary Hale, general sales manager at Jones Junction in Bel Air for Chrysler, Dodge and Ram, said the dealership has always aggressively stocked inventory.

“When the chip thing came about, we were sitting on decent inventory,” he said. “If you are fortunate enough to have the car a customer is looking for, you are in a good position, because chances are nobody else has that car.

“I’ve been doing this 32 years, and I’ve never seen anything like it,” he said.