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Looking to take advantage of low-interest rates and stimulus check savings by buying a used car? Get in line.
Used car prices are soaring nationwide due to a global semiconductor shortage, which has forced some car manufacturers to shut down assembly plants, limiting new car inventory. There's also pent-up demand from consumers, who are armed with savings and ready to spend at this stage of the pandemic.
Killion Auto Sales in Round Rock had just one used car on its lot on Monday, compared to at least 60 normally, and has closed on Saturdays for the foreseeable future. "I am still buying cars, but they are just selling as fast as I bring them," co-owner Nathan Killion told Austonia.
Used car inventory is largely determined by new car inventory, fueled by trade-ins and other turnover. Car manufacturers faced factory shutdowns during the pandemic and are now contending with a chip shortage, meaning new car inventory is severely limited, and demand is spilling over onto used car lots.
Although Killion said demand is high, with stimulus checks and accidents driving customers onto used car lots, it doesn't make financial sense for him to buy used cars at a huge markup because his small dealership handles its own financing. Even if he is able to sell such vehicles at a profit now, the market will eventually correct. If one of his buyers gets into a car accident, insurance may only cover a portion of the car's sales price, leaving him out of pocket. "We've decided that it's better to have fewer cars that I can try to sell for reasonable money and to mitigate that loss when something bad happens," he said.
Still, with sparse lots and eager customers, the used car market currently benefits sellers.
"I just sold one of my cars for nearly the same price I paid for it three years ago," Randy Frederick, Austin-based managing director of trading and derivatives at the Schwab Center for Financial Research, tweeted on Monday.
Used cars indeed; it's a seller's market. I just sold one of my cars for nearly the same price I paid for it 3 years ago. Sell if you can; don't buy if you don't have to.https://t.co/wyfH3UcCAS https://t.co/1eIzCIj3Cs
— Randy Frederick (@RandyAFrederick) July 19, 2021
South Austin Nissan is "giving all the money for decent vehicles" due to the nationwide inventory shortage, sales consultant Mark Sanchez wrote in a May 6 Facebook post. "Decent mileage and well taken care of pre-owned vehicles are worth GOLD!"
Carmax, the largest buyer and seller of used cars in the U.S., saw record demand in the first quarter of its current fiscal year, selling approximately 452,000 cars between March and May, up 128% from the same period last year, according to a statement shared with Austonia. The retailer, which has two Austin locations, reports that its sellers often receive a higher offer than they anticipated.
But a seller's market may price out prospective buyers. (Just look at the Austin housing market, where similar supply-and-demand issues are at work.) Overall, used car and truck prices increased 10.5% in June and a staggering 45.2% year-over-year, according to the U.S. Bureau of Labor Statistics.
Some used cars now command higher prices than their brand-new counterparts. "Dealers may think used car buyers are willing to pay more for the instant gratification of a lightly-used vehicle they can drive right off the lot rather than waiting for a new one," iSeeCars.com Executive Analyst Karl Brauer said in a recent analysis.
Killion anticipates it will take at least a year for new car inventory to catch up to demand after various delays. In the meantime, he has four or five notes on his desk from people who are looking to buy a used car, if only he can find one. "Having transportation in Austin, Texas, is not exactly optional," he said.
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Tesla CEO Elon Musk announced a record-setting second quarter during an earnings call broadcasted from the Giga Texas construction site in Southeast Travis County on Monday.
The electric carmaker reported more than $1 billion in quarterly net income and the production of more than 200,000 vehicles for the first time despite challenges such as a global semiconductor shortage.
"It … seems that public sentiment towards electric vehicles is at an inflection point, and at this point, I think, almost everyone agrees electric vehicles are the only way forward," Musk said.
Exterior shots taken just a while ago of Giga Texas (while @elonmusk is reportedly at the Gigafactory!) during today's earnings call!
Hope @peterdog15 got to catch the technoking in his video! #fastestinhistory #Tesla pic.twitter.com/WqeDlb5wU3
— Austin Tesla Club (@AustinTeslaClub) July 26, 2021
Despite rising consumer demand and adequate factory capacity, Tesla faces what Musk described as a "quite serious" global semiconductor shortage, which will determine the company's growth rate for the rest of the year.
With increased revenue and production, Tesla is investing in new factories, Chief Financial Officer Zachary Kirkhorn said. These include Giga Texas, the $1.1 billion manufacturing plant that broke ground last summer and is slated to open later this year.
The Giga Texas factory in Southeast Travis County has rapidly increased in size since ground broke last August. (Tesla)
Musk commended the construction team for "incredible progress," transforming what was basically a vacant site into "a mostly complete large factory a year later."
I was at Giga Texas yesterday. Team is making excellent progress. Building will be almost a mile long when complete.
— Elon Musk (@elonmusk) July 25, 2021
Giga Texas will produce the highly anticipated Cybertruck, along with other models, but Musk said scaling its production will be difficult, especially given the supply chain delays caused by the pandemic. "It's going to move as fast as the slowest of its up to 10,000 unique parts," he said.
In other news, Musk said Monday's earnings call would likely be his last regular appearance, only jumping on future quarterly calls when big announcements warrant it.
Tesla Solar recently made news when it announced plans to build the nation's most sustainable residential community in Southeast Austin earlier this month. The newly built homes will feature Tesla solar roof tiles and Powerwall battery storage as well as electric vehicle charging stations.
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The city of Austin released a shortlist of seven candidates for the police chief position left vacant when Brian Manley retired in March.
City Manager Spencer Cronk hopes to announce an appointment by the end of August, which will require City Council approval.
The finalists, chosen from a field of 46 applicants, include:
- APD Interim Chief Joseph Chacon, who previously served as an assistant chief in the department for almost five years
- Anne Kirkpatrick, former police chief in Oakland, California, who was fired last year after a federal monitor criticized her handling of a fatal 2018 police shooting of a homeless man
- Dallas Police Department Assistant Chief Avery L. Moore, who is a 30-year veteran of the department
- Atlanta Police Department Deputy Chief Celeste Murphy, who manages the department's community services division
- Dekalb County Police Chief Mirtha V. Ramos, who previously served as division chief in the Miami-Dade Police Department
- Wichita Police Department Chief Gordon Ramsay, who is a former president of the Minnesota Police Chief's Association as well as one of the first police chiefs of a major U.S. City to call George Floyd's death a murder, as reported by the Wichita Eagle
- Los Angeles Police Department Deputy Chief Emada E. Tingirides, who is also commanding officer of the department's newly formed Community Safety Partnership Bureau, which serves L.A.'s underserved communities
City staff will interview the finalists in the coming weeks, with several community input opportunities to come, according to a Monday press release.
The city conducted a public survey in March and hosted community input meetings in April to learn more about what residents are looking for in their next police chief, which helped shape the selection criteria for the position.
"They want to see the Chief be reform-minded and transparent and have a track record of fostering community involvement and accountability," Cronk said in the release. "The candidates selected show these characteristics in various ways."
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Days after Austin began once again recommending masks in public spaces, Austin ISD announced Monday that kindergarten through sixth-grade classes will have virtual options this fall.
The district will discuss the move in a special board meeting Monday evening starting at 5 p.m., while full details will be released Friday.
Teachers will not have to fret about the new option—no educators will have to juggle both virtual and in-person learning. Instead, certain teachers will specialize in virtual education, according to a press release.
The news comes after a recent spike in COVID cases in Travis County and across the nation. Children typically suffer fewer symptoms of COVID when contracted, but they are now catching the virus more often than their older counterparts without a vaccine available to them and as the more contagious Delta variant is quickly being spread.
While local health officials are recommending everyone wear masks, public school districts are unable to mandate masks due to an executive order issued by Gov. Greg Abbott in May.
Parents have expressed concern about classrooms with masks unenforceable and children under the age of 12 ineligible for a vaccine. Some have even said they would look for alternative schooling if AISD did not offer a virtual option for students.
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