The COVID Pandemic definitely has a huge impact on the used car market. One of the biggest challenges in buying cars is that people are unable to get financing because they don’t have credit scores or documentation, and therefore cannot qualify for loans.
The other challenge is that there’s decreased supply due to millions of deaths from the disease. As a result, buyers can expect prices to increase by about 20% as dealers try to make up for lost revenue while it becomes more difficult for them to find inventory.
Another significant effect will be increased demand because as survivors grow older and less able-bodied, their need for transportation services will only increase. This means not just public transit but also private, which will also have an effect on the used car market.
The impacts
The COVID Pandemic has significantly impacted the used car industry. The outbreak has killed millions, and many cars were abandoned by their owners. Used car prices remain high because supply cannot meet demand. However, one advantage is having fewer people competing with you when it comes time to purchase your next used vehicle.
It’s found that used-car prices have increased by 21 percent since April 2020, according to the U.S. Bureau of Labor Statistics.
Many people are simply no longer able to afford new cars. The number of vehicles sold in the US has been declining and this trend will continue as more and more buyers opt for older, cheaper models that they can buy with cash or a trade-in from their old vehicle. It’s a great time to be a seller, but not a buyer.
It’s likely that there will be an increase in demand for small SUVs because they have better fuel efficiency compared to larger sedans. They tend to get better gas mileage than other car types–making them more energy efficient and cost effective while still providing ample room for passengers and cargo storage space for those who need it. When dealerships give you the keys to a newly purchased vehicle, they will usually be on a key tag such as those available from MBR Marketing. You can get quality car key tags at https://mbrmarketing.com/dealer-supplies/stock-key-tags.
Drivers are also opting to purchase pre-owned vehicles instead of new ones due to limited funds, increased costs associated with purchasing newer model years (due to stringent emission standards), and a decline in lending.
With more people opting to purchase used cars, prices will continue to rise as supply is limited. The trend continued throughout 2020 but should eventually stop as things start getting better. The average price increase is between 20-40% depending on the type of car you’re buying. However, certain models like Volkswagen Passats saw their monthly rates go up by 133% due to the pandemic.
It’s impossible to say when the prices will fall back down as it’s a matter of waiting for the pandemic to end. Or, at least the very least, start to drastically improve.
Considerations for your next car purchase
There have been many studies done about how a pandemic like COVID-19 could impact prices on things such as cars. For example, in the Atlanta area, there has been a significant increase on gas prices and a 26% reduction in vehicles being sold according to Kelley Blue Book.
As we continue to see more shortages in gas, prices go up and supplies become scarce. Here are some other considerations for your next car purchase:
- Many people who use their car every day, even if it’s just for work, will need to take public transit or stop driving completely. This means they’ll also be relying on other forms of transportation like buses, which might cause an increase in demand for not just public transit but private as well. As a result, used car prices may rise, too.
- Don’t try and stretch your budget if prices go up. They’ll get higher as we continue to see more shortages! Figure out how much you want to spend now and stick with that amount; don’t buy anything unless it fits in this range, or else you might regret it later down the road when gas has gone even higher and supplies become scarce.
- Though you may be wary about purchasing used cars during the pandemic, it can still help save money and provide convenience. Look for vehicles with the most recent models so that your vehicle will have some of the latest safety features. Driving a safe car that’s efficient on gas should be top priorities when shopping for used cars—especially when you’re on a budget.
- Supply and demand for new and used cars will continue to fluctuate, so prices can change quickly. Depending on where you’re located, your local laws regarding COVID-19 will consistently change as you go from lockdown to various stages. Therefore, the way most people live and work will also consistently change. Prices can rise up quickly during certain lockdown stages and then drop.
If you’re able to find a good deal on a used car, it’s a good idea to make a purchase quickly. Otherwise, the price may increase quickly, or someone else might take the deal. Of course, do your research to ensure you are in fact getting a good deal. This includes comparing prices from the last few years, evaluating the car’s condition, and looking at the resale value after the pandemic.
If possible, consider finding another means of transportation until everything goes back to normal. For work-related transportation, ask your employer if you can work remotely instead. Most employers will understand if you’re having a difficult time finding a way to get to work.
As the COVID Pandemic continues to impact everything from used car prices, to gas mileage, and other aspects of everyday life, it’s wise to keep up with this crisis so that you can stay informed. Keep updated on what’s happening now and around your area, so you can prepare for anything!