New Vehicles vs. Used Vehicles: Make Sense of the Market
- The recent volatile market and supply shortages have made selling your car to a private party or dealership an attractive option. Don’t expect to get exactly what you want from a buyer, though.
- Online sales have exploded in popularity following the pandemic.
- Used car prices are up roughly 30% although those prices are likely to come back down. Furthermore, supply shortages have led to sparsely populated new car inventories and new vehicles without certain features.
Are new vehicles overpriced right now?
New cars are a hot commodity right now. Dealerships are having difficulty acquiring inventory due mainly to supply chain issues and the long-running microchip shortage. As a result, consumers can’t walk into dealerships and buy fully-equipped cars as they did in 2019. Consequently, automakers have chosen specific chip and sensor-based technologies, like some collision avoidance systems, to omit from new cars. Ultimately, these moves are intended to keep sales moving and the industry afloat.
Are used car prices dropping?
Used car prices have recently hit stratospheric highs. In some cases, consumers can expect to pay around 30% more for used cars than they did during pre-pandemic years. However, all is not lost. Kelley Blue Book (KBB) estimates that used car prices will lower and stabilize.
When is the best time to sell your car?
If you can make do with one less vehicle, now might be a good time to consider cashing in on the seller’s market. However, you might not get what you want from buyers just because average costs are up. Also, although trade-in values have risen along with cash values, trading in might result in paying more than the Manufacturer’s Suggested Retail Price (MSRP). So, while you may get more value for your trade, you may have to pay more for the vehicle you want.
How do you sell your car?
There are several venues to use to sell your vehicle. First, consumers can sell their cars to dealerships. Dealers are paying more for gently used cars because they are having a difficult time getting new inventory. For example, Bankrate.com reports that dealership inventories of 2020 models have increased by roughly 22%. Next, owners can sell their used cars on websites like Facebook Marketplace. Marketplace allows buyers to communicate with sellers directly to negotiate terms of sale and get the best deal. Of course, there are likely no guarantees with transactions between parties that do business on Facebook Marketplace.
Finally, owners can use the services of online dealerships like Carvana and Vroom. Utilizing these services has grown in popularity due mainly to the pandemic. Specifically, 30% of new car sales occurred through online dealerships, up roughly 2% in pre-pandemic years.
Understanding the market is essential to getting the most out of your vehicle or buying a new car
Selling your car in a lucrative market can be a prudent move. However, buying a car in that same market can be problematic. Furthermore, consider the higher cost of new and used vehicles when you think about purchasing or trading in. Scroll down to the following article to read more about buying used cars.