Whether you are a consumer or a salesperson, you know that auto prices have significantly increased over the past few years. The recently high sticker prices put consumers into sticker shock and changed how they shop for cars.
But now, with the pandemic slowing, what’s in store for the used car market?
The Reason for the Surge
Chip shortages and labor shortages slowed the production of new cars, so more and more buyers turned their attention to used cars. The decrease in available new inventory also had many people hanging on to their cars instead of trading them in for a new model. These two factors helped create a shortage of used cars, which drove up the price of the available ones.
The Used Car Market Outlook
There is both good news and bad news for the used car market. The good news is that experts believe that used car values will start to balance out, and you will probably see prices decline by the middle of 2022. Traditionally, used cars depreciate the most in the fall and winter, and this, combined with the expected increase in new car production, will help to drive down used car prices later in the year.
The bad news is that the prices will most likely not go back down to where they were before the pandemic, and there won’t be a dramatic drop. Supply chain issues will still be an issue in 2022, so auto production will not go completely back to normal. The law of supply and demand will keep prices for new and used vehicles higher than before the pandemic.
Selling Used Cars
With the high prices of used cars continuing for a while, someone who has a used car sitting in their garage can use it to their advantage. Car dealerships need used cars to sell and will pay top dollar for vehicles to add to their inventory. The high prices for used cars also mean that consumers can get more for their trade-in and use this to lower their cost of a new car or an upgraded used one. With prices expected to drop over the next year, now is the time to act.
What Does This Mean For Buyers and Sellers?
Ultimately, consumers who need a used vehicle will have to act fast once they find one. The market doesn’t allow them the luxury of dragging their feet once they find something they like, even if it’s not the perfect vehicle. Car buyers might need to expand their search, using the internet and their phones to find the vehicle they want, even if it’s at a dealership in another area. This means that dealers need to provide more information on their websites and offer extra services to draw in customers.
The push for pre-owned vehicles will continue well into 2022 and beyond. The market is on its way to correcting itself, but it is a slow process, and it will never go back to the way it was.
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