Albuquerque auto industry sees low inventory, high demand

ALBUQUERQUE, N.M. – The auto industry’s inventory is low, demand is high and prices are soaring.

You may have even been offered big bucks to trade in your vehicle, but you might want to approach with caution, especially if you’re in the market for a used car.

Experts said the market has got to turn around, and when it does, people might end up upside down on these over-valued used vehicles.

The pandemic hit the auto industry hard. At one point, production pretty much didn’t exist. Since then, it’s been a slow recovery, lots are low on inventory, and dealers are paying more for trade-ins.

But that means prices are also up – 42% for used cars since the beginning of the pandemic. New Mexico could be in for a vehicle bubble.

“Once the supply chain gets back online and back in order, it is likely that we’ll see drops in our used car prices and that means a lot of people can have negative equity on their cars which means lower trade-in values in the future," said Reilly White, UNM associate professor of finance. "And also in the event of something like an accident or a resale, people might be in a position of losing more money than they often typically do when car ownership happens. So it’s definitely a huge finance concern."

The selection certainly is not what it used to be.

White said the number of cars made in the country in 2020 dropped 20% less than the previous year. It dropped even more this year.

He said much of the problem is related to the supply chain. But that, of course, has rippled on to buyers.

“When we talk about ‘oh my gosh, I can trade my car in today and get this huge sum of money’ before, in April 2020, about 44% of trades, according to a recent report by KPNG, carried negative equity, that means you owe more on the car then your car is actually worth and that’s a really, really big deal.”

White said the best bet by experts is that the market will rebound. But the question is when?

He said the prediction is in the next six months to a year and a half.