As we approach the six-month mark of the pandemic, the impact on car prices hasn’t been what a lot of us expected. Back in March, it seemed like maybe car prices would drop—a lot of people waited, figuring that the ensuing economic downturn would lead to great deals in a few months. Instead, prices have stayed high, and good deals are scarce.
Cars are still in very short supply at most dealerships. Factory shutdowns and disruptions in the global supply chain have led to seriously curbed dealer inventory. So scarcity of inventory is having a big impact on prices and demand.
Adding to the buying frenzy, a lot of money Americans had allocated for discretionary expenses has gone unused this year. Vacations have been canceled. Most people aren’t eating out often, if at all. Or doing much of anything that they’d usually be spending money on. So they have extra money to put toward a car purchase. And some commuters who didn’t own a car before are now buying one, as a self-isolating alternative to public transportation.
And in addition to all of that, most of our lives have shrunk down to the confines of our homes, and very few activities. So getting a new car is a welcome distraction; it’s a big life event that adds a little excitement amid day-to-day life that could use that.
Here are some of the takeaways from the current situation:
It’s a good time to sell.
Because dealers’ new car inventory is so limited, many of them are seeing customers buy used cars instead—so they’re selling through their used inventory really quickly. And with very few new cars available, they don’t have the steady flow of used cars they usually take in on trades.
So car shoppers looking at traditional dealerships are going to see extremely limited options, and likely higher prices than normal as demand outstrips supply.
This means that if you’re thinking about selling your car, it’s a great market in which to do it. You’re likely to have lots of interested buyers who haven’t been able to find what they want in dealers’ inventories. You’re likely to sell your car faster, and get a better price than you might have a few months or a year ago.
National prices are on the rise.
CarGurus, one of the largest car listing sites, shows used car prices climbing sharply from the end of June to today (August 20). Most of the trends and conditions show no likelihood of this momentum slowing down.
Car valuation service Kelley Blue Book reported earlier this month that “used-car prices are still at record-breaking levels, and in some segments, there are models coming close to new-car prices, including sports cars.”
Interest rates are also extremely low, which is likely another factor contributing to the phenomenal levels of demand.
It’s a good time to buy—from a private seller.
You’re almost certainly always going to get a better price when you buy a car from a private seller, rather than a dealer. Think about all the overhead that dealers have—carrying costs (the interest they’re paying on each car in stock), staffing costs, facility costs, and the money they typically put into a used car to get it ready to sell. That’s a lot of costs to offset. And when they set a price for a car, they have to build in enough margin that they still make a profit even after covering all those costs.
But a private seller—an individual selling their own car—doesn’t have to build in all of that. As an added bonus, you generally get a better idea of the car’s history and how it was (or wasn’t) cared for.
Prices, on average, might be a little higher even if you’re buying from a private seller, but prices are still trending upward, and show signs of continuing to do that. It’s a good time to start looking for a car that matches what you’re looking for, and if you find it—move fast! Lots of buyers report losing out on car after car that was sold within days or even hours when they stopped too long to think about it. Do your diligence, but if you’re getting an inspection, or pulling together financing, it’s a good idea to give the seller a deposit if it’s a car you really want.
Whether you’re buying or selling, TRED is a great option—especially now, during the pandemic. You get all the price advantages of selling or buying privately, but with all the protections of buying from a dealer. And you don’t have to worry about being scammed, or go to the DMV to process paperwork—TRED handles all that for you. Visit the TRED site to check out our current cars for sale, or see what your car’s worth.