Americans love buying trucks, but faced with the high prices of a new truck, many are turning to used trucks. Typically, used cars are cheaper than a brand-new one, but nowadays, even a used truck can be expensive. Here’s why that might be happening.
The Great Recession
Just over 10 years ago, The Great Recession swept the globe and caused an economic downturn that hasn’t been seen in a long time. Many areas of the economy were affected by this, but the auto industry took a big beating compared to other industries.
Because of how important cars are to everyday life, The Great Recession hit every area of the auto industry. People were simply not buying new cars and if they were, they were avoiding large vehicles like SUVs or trucks. If they had a truck, they’d drive it less often too, because gas prices were higher and the average truck’s poor fuel economy just wouldn’t cut it.
Less people buying cars meant that automakers had to make less cars, according to Reuters. Surely enough, the auto industry faced a full-blown crisis and it required the U.S. government to bail the industry out. But of course, things recovered and the American auto industry returned to good form in a few years. However, the effects of that cut in their car production is still felt to this day.
Modern used trucks
Consumers who are shopping for a used truck nowadays might notice that a 10-year-old truck is still very expensive. Of course, prices will vary and there are still cheap pickup trucks on the market, but the general trend is towards a more expensive used pickup truck. For example, according to Reuters, the average price for a used vehicle from 2010 has risen by 75% compared to 25% for a new vehicle.
Reuters also mentioned that the number of used vehicles that are listed at under $10,000 from The Great Recession era has been declining whereas the demand for those vehicles hasn’t. These facts apply to cars as a whole, but it’s even worse for trucks. Carmakers didn’t stop making cars during The Great Recession, they simply prioritized cars that were selling, and those tended to be small vehicles.
Because of that, less trucks were made from that era. Fast forward to present day and those trucks are now in the used car market. But because a lot of people want a used car, the supply of used trucks from that era can’t meet the demand for them. The result of this is simply higher used truck prices.
Just like The Great Recession, Reuters believes that this stark increase in used truck and used car prices will correct itself in a few years. The main reason why used trucks cost so much is because there aren’t many trucks from a decade ago due to the automakers cutting their production.
However, after the bailout, consumers started buying cars again and automakers started making more vehicles again to meet that demand. Compared to The Great Recession era, there are likely far more used trucks from the years that came after The Great Recession. According to Reuters, used trucks should start to cost less as the trucks from 2012 and beyond start entering the used car market.
Reuters thinks that by 2022, used trucks might be affordable again. However, that’s not a guarantee by any means. Reuters thinks that the used truck prices will rebound because there will be more used trucks available from ten years ago in a few years. But if another recession hits, then truck prices, both for used and brand-new ones, will likely go up, or at the very least, stay expensive.