New car prices remain high despite high inventories. Here’s why

The cyber attack on CDK Global, a software provider for car dealerships in the US and Canada, led to system outages for car dealerships in North America. Meanwhile, new car prices remain well above pre-pandemic levels.

CoPilot Founder and CEO Pat Ryan joins Asking For A Trend to provide insight into the CDK hack and why car prices haven’t decreased at a faster rate.

“It really took the industry back to the Stone Age in a lot of ways, because with systems locked down, they [car dealerships] they couldn’t do business the way they are,” Ryan says of the hack. “These are typically your systems of record. And like their systems of record, they’re kind of the hub for everything they do.”

In turn, the cyber breach inhibited the ability of customers to check car prices and dealers to update their websites and prices.

“It was not possible to obtain information to send loans to banks. I mean, it just complicated everything, and now it’s happened at a time when the market is slowing down, but traders are feeling a lot of headwinds,” says Ryan.

Ryan points to “structural increases in car prices” leading consumer pressures: “We’re still up more than 30% from pre-COVID. most cars are purchased with financing, around 80% of cars. And so, when your car is purchased with financing, interest rates go up and prices go up.

For more expert insights and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Nicolau Jacobino