The Used Car Market Projected to See Lowest Prices in Recent History
The COVID-19 pandemic created an array of problems that affected every area of our lives. And the car market was certainly no exception. We saw new car supply chain issues that affected the global supply chain automotive industry. And those new car issues trickled down into the used car market as well.
Inflation, wildfires, hurricanes, drought, financial crises, the semiconductor shortage, and so much more all converged on the market to make it nearly impossible to produce and ship new cars throughout the world. This resulted in an increase in used car prices of over 40%, making it extremely difficult to purchase even a used vehicle.
But it seems that things are finally starting to get back to normal and we may see the used car market start to return to pre-pandemic levels. At least, the signs are there that things may be finally turning around. Already we’ve seen a 4% decrease over the month of August and prices seem to be dropping across the board, but there’s more to it than that.
Even though the pandemic is slowing and situations for many people are improving, there are still plenty who are struggling to make ends meet and that means they’re not able to afford their vehicle payments. As a result, repossessions and defaults on loans are increasing, which means that used cars will become more available as these vehicles are returned to the lots.
Along the same lines, there may be fewer people looking for vehicles because of their financial situation. The pandemic wreaked havoc on everyone and there may not be money in some people’s budgets to pay for a vehicle, whether new or used. As a result, the demand for some of those vehicles can also start to decrease.
Next up, vehicles that were seeing extreme inflation on their prices that was definitely not deserved are starting to see their prices fall even more. While some used cars are generally better at holding their value, during the new car supply chain issues we were seeing all used car prices skyrocket. That can’t hold when the market starts righting itself because those cars were never a great option for used car buyers in the first place.
As the global supply chain automotive industry starts to come around, we’re seeing new cars start to trickle into the lots again. And as those new cars trickle in the used car prices are going to start dropping down. That’s because demand for those used cars was inflated by the fact that people weren’t able to purchase a new vehicle.
As manufacturers begin to improve their process and new cars begin to roll off the line we’ll see some improvements to the used car market as well. Since the used car market is highly dependent upon people being able to buy new cars, it’s going to require a balancing act before things get back where we want them to be. But they are definitely starting to improve. The market is starting to adjust, cars are starting to become available, and used car prices are starting to fall.
What all this means is, if you’re in the market for a used car, it’s a great time to start thinking about buying. With less demand, prices are better than they have been in a long time, and it looks like that’s going to keep trending.