Used Car Values Are Skyrocketing For a Frustrating Reason
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If you’re looking to buy a car, be cautious; but if you’re trying to sell or trade your used car, then it’s time to celebrate. It’s true—used cars have been skyrocketing in price this year, thanks to a shortage of new vehicles, caused by a computer chip manufacturing shortage. Due to the impact of COVID-19, vehicle manufacturers are running low on the supplies they need to make new cars.
This means vehicle demand is high; so for those looking to sell or trade-in their vehicle, now might be the right time to take action. But for those looking to buy a used car, it may be a difficult period to save money on your purchase.
The current state of the car market means you’ll need to weigh your options wisely. If you buy a new car, use Jerry to help find the policy and coverage to protect your purchase.
Why computer chips are indirectly affecting used car prices
Industry Week reported that the shortage of new vehicles was due mainly to two effects of COVID-19: many manufacturing workers were quarantined, and that computer chips (the primary limiting factor here) became in short supply. Facilities that were pumping out industrial-grade chips for cars instead began to funnel their time and production efforts into consumer-grade materials instead.
The result has been a production shortage across the U.S., one that has dramatically cut down on available new vehicles. Now, with social distancing measures and lockdown requirements being lifted, Americans are driving more. This has increased the demand for vehicles, a demand that can’t keep up with the current supply shortage.
A low supply of new cars means the demand for used cars has increased. This increased demand has raised the prices of used cars.
A seller’s market
As we mentioned previously, it’s a great time to sell your used vehicle. You’re likely to get more than you would have a year ago at this time, via private sale or dealership, and if you’re opting to trade in your used car, then dealerships could be more flexible with your trade-in options.
What should you do if you need to buy a car?
The used car market is expensive right now—so buying is a bit trickier. Consumer Reports notes that used car prices have risen by 12.5%. But here’s a tip: consider a sedan for your next vehicle.
The growing popularity of SUVs and light-duty trucks might translate into a better deal at the lot on a sedan. There is simply less of a demand right now for sedans compared to trucks and SUVs.
The bottom line on the 2021 car market
Ultimately, deciding when to buy a used or new car, or when to sell your existing vehicle, is up to you. Even though 2021 has brought an increase in used car values, this isn’t the first time that the market has fluctuated, nor will it be the last. It’s still a great time to consider selling, or perhaps trading in your used car for something new.
And for those on the hunt for a vehicle, used cars are going to be considerably more expensive than they were last year—that’s the truth. But, by taking a look at new vehicles, or specifically sedan models, buyers can still find ways to benefit from the skyrocketing price of used cars.