Holiday Cheer as Used Luxury Car Values Sink: Here’s Why
The recession and COVID-related interruptions have wreaked havoc on car values. Mostly, the affect has been an astonishing rise, not lowering, of prices. But crypto-currency is dropping faster than a lead Zeppelin. And there is a silver lining from the crypto-currency disaster currently unfolding. What’s happening is that net worth is also tanking, and many are now dumping their luxury vehicles to bank some cash.
How is crypto-currency affecting luxury car values?
As of today, crypto juggernaut Bitcoin is said to be “on the road to irrelevance.” And upstart FTX has filed for bankruptcy. So this is just the start. According to the New York Post, luxury icons like the Mercedes G-Wagen, McLaren 570S, and 600 LT are all starting to back up on the secondary market. It’s a telltale sign that something is affecting the market, and that is probably the crypto crash.
While G-Wagens were selling for $300,000 or more at the beginning of 2022, some with low like are selling for far less than $200,000. A 30 percent drop means $100,000 in value or more has disappeared. Luxury and exotic car sites like AutoTempest are seeing a large number of McLarens hit their sites, which they told the Post is unusual.
Is Crypto collapse the only thing affecting luxury car values?
Even Autotrader, not known for exotic car dabbling, is seeing an uptick in six-figure cars being sold. The percentage of sales has risen from 0.16 percent in 2020, to 0.69 percent now. Though not seeming like much, with an inventory of almost 1.5 million cars, it is seeing a dramatic rise in sales of this segment.
Another factor in all of this is how far the NASDAQ has dropped. Major losses there combined with the collapse of crypto is fueling this luxury car value drop. So how does this translate to those who aren’t vape smoking tech-stock racer boys?
Well, it doesn’t affect the price of what they are in the market for. At least for now. Wholesale used car values really started falling in October, and have continued into this month. So dealers are getting some pretty sweet cars for a lot less. Unfortunately, they’re not passing this windfall onto buyers.
Will the crypto collapse trickle down to regular car values?
Wholesale used car prices have easily dropped 10 percent year-over-year. This is according to Manheim’s Used Vehicle Index for October 2022. And luxury car prices are down by 12.3 percent last month. So there is beginning to be an overall drop in prices up and down the used car spectrum. But it is offset by the 7.2 percent increase that buyers are paying year-over-year.
What this all means is to keep your eyes on the prices and don’t be afraid to offer less than asking price. Dealers may balk at the suggestion, but there are going to be plenty of hungry sellers as this drop in car values rolls into 2023.