Auto Finance: Ways to Save while Dealing with Rising Car And Fuel Costs

• Author: Jeffrey Simmons
• Posted: 2024-08-20

The pandemic coupled with other world events has caused a lot of supply and demand problems for automobile industry manufacturers, dealers and parts companies. These issues have made it difficult for individual drivers and businesses to buy and maintain motor vehicles. Prices for cars, parts and gasoline are at historic highs. New and used vehicles, for example, now cost thousands to tens of thousands of dollars more than pre-pandemic norms. Gas prices have reached $5 a gallon in some areas of the country.

Individuals, families and business owners have been forced to make hard financial choices to stay afloat. Some people have experienced job loss because of a lack of transportation for commutes. In many areas, drivers can't even afford the gasoline needed to run their vehicles.

What Caused Higher Car And Fuel Costs?

Automobile and parts manufacturers can't meet new vehicle and general parts replacement demands. Most companies initially reduced their computer chip orders early in the pandemic to cut costs after incorrectly anticipating fewer vehicles on highways and low demand during stay-at-home orders. These manufacturers didn't accurately predict the sudden need for laptops and portable devices for people to work, learn and play at home more often or subsequent competitive demand for computer chips. They also didn't anticipate the increase in home delivery and shipping requests that put a lot of commercial vehicles on the roads and caused supply chain disruptions or the Great Resignation and massive labor shortages that disrupted the manufacturing sector.

As a result, the current automobile market has high demand for new and used vehicles and parts without enough manufacturing facility, dealership or warehouse stock to meet this need or even future need a year from now.

What Does This Mean for Buyers, Sellers And Drivers?

The automobile market is currently a seller's market because again there are more people in need of motor vehicles than stock available and more buyers willing to pay outrageously high prices. The demand is so extreme that many buyers are waiting months for the arrival of their new vehicles. With the costs so high, many automobile owners and drivers can't afford to replace vehicles that break down or even regularly use and maintain their vehicles.

Many experts believe that as gas prices go up and more people find alternative transportation and work options, drivers and others interested in buying vehicles can expect a sudden dramatic drop in prices and more stock availability, especially used car options. Although this is great for anyone who has been unable to afford a car over the last two years, the gas prices might lead many buyers to choose hybrid and electric vehicles to save money, which is expected to worsen the computer chip shortage and general new vehicle and parts availability problems.

These rapidly changing and contrasting forces make this the worst possible time to buy new or used vehicles or even continue to use automobiles as a means of transportation except for necessary scenarios, such as work and school commutes. Parts and gas prices are expected to continue to rise and make the entire situation far more dire, which means that it's time for car owners and drivers to look for alternative transportation options and diverse ways to save on related costs.

You Can Prevent Financial Damage

People who must work away from home or live too far from schools, doctors or necessary retailers who provide home-focused services like at-home schooling, telehealth and free or low-cost product delivery are expected to be hit hardest by the auto industry crisis. That said, navigating these difficult times is possible. To protect your income and savings, you need to rethink your relationship with transportation:

If you have the funds and can afford to wait possibly months for delivery, order a hybrid or all-electric vehicle now before demand for these types of vehicles increases with higher fuel prices. By investing right now, you can prevent future oil supply and demand problems from causing you immediate woes. You can still expect higher costs overall, such as with parts replacements, but you can remove yourself somewhat from gasoline dependency and even help protect the environment.

If you can't afford a new or used vehicle, use public transportation more often, if available. Most travel and public transportation companies offer discounts to riders who pay for monthly, quarterly or yearly travel passes. Some employers pay employees a stipend to cover these costs. If you're disabled or elderly, most counties offer rideshare and pickup options. Many churches also offer transportation assistance to help members of these groups go to doctor's appointments, pick up medications and groceries and attend social support events.

If you're healthy enough to deal with physical exposure to natural elements like wind and rain, consider other electric and gas options, such as motorized scooters, mopeds and bikes. You must still pay for gas, but they cost less overall than automobiles. If these options don't work, talk to people in your social bubble or vaccinated coworkers or parents about carpooling so that everyone pays less in terms of vehicle wear and tear and fuel.

It's also important to remember that you can save extra money by using delivery and shipping options to access food and products whenever possible. When you compare home-delivery fees to maintenance, gasoline and repairs of a motor vehicle, the fees are far less expensive over time.

Things to Keep in Mind

As you can see, you can protect your financial health and travel as needed or for fun while dealing with the automobile industry's problems. You merely need to understand the current market, anticipate future changes and think outside of the box to find better transportation solutions to help you get where you need to go and access the products and services that you need.