We recently caught up with Earnhardt Auto Centers to discover the five trends that may affect the price and availability of used cars. This is what they said…
“With the changes in the automotive world and the recent stay-at-home orders, there’s a lot of pressure on the used car market. Here’s an update on what is expected to impact the industry going forward.
1. Stay At Home
Across the country, indeed across the globe, people have been forced to stay at home due to the coronavirus quarantine. Drivers suddenly find their cars idled while they work at home or are unemployed. The downside of that for dealerships has been a lack of trade-ins. This has been chipping away at the availability of used cars nationally and worldwide.
As long as this trend continues, the used car market will continue to shrink. Will it suddenly explode when commuters go back to work and travellers hit the road? There’s no way to predict that with certainty.
2. Safer, Smarter Cars
With technology, old cars are becoming safer. Smart engineering is helping them last longer. They are also less likely to be damaged. Rear view cameras and rear cross traffic alerts reduce the chances of dents and dings. The internal workings of the vehicle are less likely to break. As this trend continues, so too will the trend of drivers keeping their cars as long as possible.
3. The Long Slow Leap
Although it may have taken a generation, the long leap to self-driving, electric vehicles has actually come quite quickly when measured against the 100-plus years we’ve had petrol and diesel cars. If drivers start trading their cars to take advantage of this technology, there would be a surge in regular used cars. However, this assumes that the public will have the money to upgrade.
4. Fewer Drivers Equals Fewer Used Cars
As more people choose public transportation over car ownership, the used car market will shrink further. To have used cars, those cars must first be sold new. If these new cars aren’t seen as a worthy investment, they will stay on the lot. This trend will decrease the number of car owners, decreasing the number of cars that would normally flow to the used car market.
5. Higher Prices Push Buyers Toward New Cars
Many of these market factors have already pushed the price of used cars up. This makes it less appealing to buy used. If a 2019 costs almost as much as a 2021 model, the buyer may decide to choose the new vehicle. Adding to that push, financing terms tends to be best for new vehicles.
Despite the fact that the used car market has always wrestled with the inability to predict a vehicle’s longevity, dealers remain reluctant to adjust the price to this reality. With a smaller supply of used cars, dealerships have less incentive to repair their used cars for sale and many reasons to push the prices up.
With or without the effects of the Covid-19 virus, all of the changes in technology may affect how many used cars make it to market in the next few years. These factors may override the normal supply-and-demand economics that have driven the used car market until now. The automotive industry may figure out how to ride out these trends, but consumers will have more difficulty when they want to buy a used car and can’t find one at a price they can afford.”
