Because a global semiconductor chip shortage continues to negatively affect automobile production, the demand for used cars has increased as people seek to avoid public transport amid rising COVID-19 cases. Hence, Wall Street analysts expect auto retailers KAR Auction Services (KAR) and Cars.com (CARS) to rally by more than 35% in the near term. Read on for details.A global semiconductor chip shortage continues to pose supply challenges for new cars, which is driving up the prices of the used cars. According to the Bureau of Labor Statistics, used car and truck prices have increased 45.2% over the last 12 months, while car and truck rental costs have skyrocketed 87.7%.
With the resurgence of COVID-19 cases due to the rapid spread of its Delta variant, people are expected to continue using private cars rather than public transport, driving up the demand for used cars. Furthermore, with an increase in car-related services on digital platforms, the automotive retail industry could continue to gain significantly in the coming months.
Given this backdrop, we think it could be wise to bet on automotive retailer stocks KAR Auction Services, Inc. (KAR) and Cars.com Inc. (CARS). Wall Street analysts expect these two stocks to rally more by than 35% in the near term.