Are Used Car Prices Going Down?

The last year and a half has been challenging for everyone across the world. The global pandemic has halted economies, spread people out, and delayed manufacturing. There have even been some unexpected impacts on the used car market as well.

One outcome of Covid-19 that we didn’t anticipate is the rise in the price of used cars. Luckily, there is a light at the end of the tunnel as the market is finally starting to balance itself out back to normal.

Why Did The Price For Used Cars Go Up?

Many drivers are attracted to used cars because these vehicles offer significant savings when compared to brand new car options. That hasn’t necessarily been the case over the last 18 months. Not only have used cars become more expensive, but some pre-owned vehicles have become more costly than their new counterparts.

What happened?

The short answer is that supply and demand forced the rise in car pricing. New vehicles were under a delay due to a shortage of critical computer chips. Since new cars were harder to find, shoppers started looking at used cars. The pandemic also led to more people wanting to drive themselves instead of taking crowded public transportation. Ultimately, more people were looking for used cars than what was available. When this happens, prices go up. In fact, pre-owned vehicle prices went up an average of 21% compared to previous years.

A Change In The Tide

Even though suppliers haven’t completely caught up with the demand for the missing semiconductor chips, new vehicles are becoming available. Manufacturers actually stopped producing new vehicles over the past summer since they weren’t able to actually move them off of the lot. Production is starting back up, which is a good sign that things are returning to normal.

As more fresh vehicles are made available, shoppers will have more options. When the supply is closer to meeting the actual demand, used car prices should level off. We’re not completely out of the woods yet, but all signs are pointing towards a more balanced auto market.

The Plus Side of Price Increases

While the idea of used car prices going up might seem like a bad thing, there are some who were able to benefit from this time. Folks who were looking to sell their used vehicles were in a great spot. Since the demand for cars was so high, dealerships were willing to pay top dollar to increase their inventories. That means you could sell your pre-owned car for a lot more than you would have been able to otherwise.

As the overall supply increases, dealerships may not feel the pressure to load up their lots. This could result in trade-in prices dropping. For the moment, however, it’s still a great time to sell your used vehicle, especially if you can wait for things to settle down before buying a replacement.