If you are like most people, you did not give the used car market a second thought prior to the start of the COVID crisis. But now, the market is super-hot. You could even say it is overheating. In the midst of an ongoing computer chip shortage and with factory shutdowns just another coronavirus wave away, used cars are where it’s at.
It goes without saying that almost everything about normal life has changed in the last two years. How much of life actually returns to normal remains to be seen. We might even end up redefining what normal is. At any rate, there are lessons to be learned in all of this. The top six lessons learned from the current used car market are as follows:
1. Used Cars Are a Supply and Demand Industry
At the very top of the list is a newfound understanding that the used car market is a supply and demand market. In fact, it is a lot like real estate. When demand is high and supply is low, prices go up. Prices go down when supply outstrips demand. Truth be told, the used car market is a textbook lesson in supply and demand economics.
As things currently stand, used car prices are a lot higher today than they were two years ago. They are higher today than they were 18 months ago, before new-car inventories began to dwindle. It boils down to the fact that people are still looking to buy cars. If they cannot find what they want on a new lot, they turn to the used market.
2. There Really Is a Seller’s Market
Just like with real estate, the supply and demand nature of used cars suggest that there really is a seller’s market. There are times when sellers are in control. Right now is one of those times. Sellers looking to get maximum dollars for their used car are literally in the driver’s seat.
People areso desperate for used cars that you can literally write your own ticket. You determine the price you want. You determine how you want to be paid – cash, certified check, etc. No matter your price or terms, there is bound to be someone willing to buy from you. That is just where we are these days.
3. Dealers Will Buy When They Have To
The next lesson is that dealers will buy when they have to. Companies like California’s Car Fast Cash will always be willing to buy used cars in San Bernardino County, across California, and across the entire U.S. Yet new dealers tend to shy away from buying used cars unless they absolutely have no other choice. Right now, they have no choice.
New car dealers are so desperate for inventory that they are calling their customers to inquire about interest in selling. That is pretty brazen. The same dealer who sold you your car two years ago may try to contact you to find out if you want to sell it back to them. All of this is to say that, once the car crisis blows over, dealers may no longer be willing to pay good money for trade-ins. That’s okay. Just get up and head for the door. You will see how quickly the user changes their mind.
4. Wants Aren’t the Same as Needs
Moving on from the business side of things, one of the most important lessons people have learned from the COVID crisis is that wants and needs are not the same thing. Nowhere is this clearer than in the used car market.
Prior to the onset of coronavirus, it was nothing for someone to walk into a dealer and throw down $25,000 or more for the latest SUV or pickup truck. But when coronavirus hit and people began fearing for their livelihoods, it suddenly became clear that a new car was a luxury more than anything else. The same thing is starting to rear its head in the used market.
Just because someone has the money to buy a used car does not mean that doing so is wise. Maybe that’s you. Perhaps you want to purchase a used car, but do you need to? Is your current car still serving you well? Is it still safe to drive and good on fuel? If so, now might not be the best time to buy.
5. Not All Sellers Are Equal
Finally, the current used car market has taught a lot of people that not all sellers are equal. Dealers tend to have a particular mindset from which they rarely deviate. That is good in the sense that you know what you’re getting if you have experience working with a particular dealer. However, dealers tend to lack flexibility.
Online dealers are a bit easier to deal with if you are into the technology thing. They are also extremely convenient. You can make a deal online and then sit back and wait for your car to be delivered. One particular online dealer even makes use of a car vending machine.
The riskiest way to buy a used car has only been amplified by the current market. That way is buying from a car’s current owner. You never quite know what you are getting into when you answer an online classified or make an appointment to see a car in person.
6. Good Cars Have Good Resale Value
Finally, good used cars have good resale value. The lesson in this is to take good care of your car if you have plans to sell it before running it into the ground. The better job you do with routine maintenance, the more your car will be worth when you are ready to sell.
The current used car market is the hottest market we have seen in decades. That is not going to change until automakers ramp production back up. For now, used cars are where it’s at. If nothing else, the market is teaching us things about used cars many of us never acknowledged before.