We’ve certainly been through it over the past couple of years and many people are now sitting on savings, wondering if they should upgrade or buy a new car.

But for once, having the money isn’t the key requirement. Finding the right car, never necessarily easy, is now harder than ever. New cars are in short supply and used cars are more expensive than usual, and ultimately the reason for this? Covid. Again!

Let’s start at the top. New cars today are more technologically advanced than ever before and, as such, use a lot of silicon chips – semiconductors.

With countries entering lockdown, the new car market was slowing

Semiconductor fabrication is centred in the Far East – Taiwan mainly – where a lot of today’s tech originates from. Rewind to the first quarter of 2020, and with countries entering lockdown, the automotive industry needed to slow production down, needing fewer chips as the market for new cars was slowing.

The foundries that make the chips therefore suddenly had a lot of capacity and not a lot else on… until makers of smartphones, tablets and laptops suddenly saw demand for their products increase dramatically, as people started working and teaching from home. They got in touch with the foundries and placed orders. Large ones.

Months passed, and as the world slowly raised its head above the parapet and eased restrictions, many people found that they had saved money through not going out, not buying new cars (obviously) and not going on holiday.

Automotive manufacturers saw this and quickly picked up the phone to their suppliers, asking to resume production, and quickly. But the foundries had full order books. Their capacity had been taken up by other customers (naturally) and they couldn’t just start up again for the car manufacturers.

Limited availability and long lead times

As this played down the line, we get to today, where almost every manufacturer has a notice on its website about limited availability and long lead times.

Time to buy used then, right? If it were only that easy. Because there are far fewer new cars around, there is a knock-on effect on the rest of the market and used car prices are soaring.

Anecdotally, someone who was contemplating upgrading their car in mid 2020 and was offered around £6k as a part-exchange price has now, more than 12 months on, been offered almost £9k for the very same car by the same garage. That’s an extreme example, to be fair, but all around the country, and at all levels, used car prices are on the rise.

Restarting complex supply chains takes a long time

And new cars aren’t about to suddenly flood the market next month. Restarting long and complex supply chains takes a long time, and shipping goods from Asia to Europe is currently undergoing a crisis of its own. So even when the foundries are back up and running, there’s still an issue in getting the semiconductors to the manufacturing plants.

So is it the right time to buy a car? Well, if you need to (and I do), be prepared that the bargains you might have expected are fewer and farther between, but your current car might be worth more than you think.