The post-pandemic car market: what lies ahead?

A lot of things have changed in the car industry since the start of the pandemic. Some things will likely go back to the way they were. But a lot of new ways of doing things—that were necessary adaptations for the pandemic—may prove to be better ways, and may turn out to be permanent changes.

One thing we can say for sure is that people will keep buying cars. And here are some of our predictions for car buying and selling after the pandemic.

The used car market will stay hot

After a couple of lackluster months at the start of the pandemic, used car sales surged,  surpassing even pre-COVID numbers. This may have been in response to the scarcity of new cars, or maybe people were buying more used cars from individual private sellers, to minimize their exposure to more people. Also likely is the fact that in an uncertain economy, it seemed more sensible to save money by buying a used car instead of a new one.

Whatever the reason, the used car market has been on a hot streak—and we predict that in the ‘new normal’ that will continue as more buyers have discovered the advantages of buying used.

Contact-less buying is here to stay

Car sales have typically been a relentlessly in-person affair. Many dealerships have been slow to adopt technology that minimizes the high-contact nature of their business. More in-person interaction can have advantages in terms of level of service, and it also maximizes the possibility of making a sale. But the pandemic has reduced in-person contact by necessity. 

That means car buyers interested in buying from a dealership have been able to interact and even negotiate via email or phone. In many cases they’ve been able to arrange to test drive a car alone or with a member of their household—without the sales guy. All of this is empowering to a car buyer, and now it’s likely that they’ll insist on it more in the future. To see how TRED is optimizing contact-free buying and selling, check out our article on it.

Private car sales will continue to trend upward

With dealerships closed or operating on limited schedules in many areas during the pandemic, a lot of car buyers have started to consider buying from a private party when previously they might not have. And they’ve likely discovered that there are advantages to buying a car straight from its owner, like better pricing, and being able to learn more about the car’s history and how it’s been driven and taken care of. Buyers have also probably started to find out that for added security and peace of mind—while still getting the advantages of savings and avoiding the DMV—they can use a marketplace like TRED.

Dealers will keep less new car inventory, and take more orders

A lot of car shoppers search the dealer inventory in their area, and they usually find something that matches well enough with what they want in terms of model, color, and options. That almost always means that they end up paying for some options they don’t want, having to live without something they do want, and maybe not getting their first choice as far as exterior and interior color combination. It works, but it’s usually a compromise. There are so many variables and options when it comes to cars, that it seems incredibly inefficient for dealers to basically try to guess which color combinations and options buyers are going to want in such a big investment.

With recent supply chain constraints, many dealers have been operating with far fewer new cars in stock than before, and more new car customers—unable to find what they want in stock—are ordering the car they want. This can mean a wait of typically 1-3 months, but now that more new car buyers have experienced it, and no doubt seen the benefits of ordering exactly what they want (at no additional cost for the ability to customize), we suspect this will become a more popular option.

People will buy less-practical cars

It seems likely that, while many people will return to commuting at some point in 2021, a lot of companies will continue to allow remote work. This means that things like fuel economy, maintenance costs, and mileage depreciation may not weigh as heavily for some car owners. We suspect this—along with the world-may-be-ending vibe of 2020—may lead more drivers to choose the less practical option. Maybe they’ll choose that big pickup or SUV they’ve always wanted, rather than the compact sedan that gets great gas mileage, now that they’re not driving as much. Or the Porsche that they would have worried about putting too many miles on during a daily commute.

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