Each year, automakers unveil their brand-new vehicles. New models and concepts are always a big hit. In these hard times, the auto sector has been affected by pandemic. In essence, record sales for new cars plummeted – visit us!
People still buy cars, but not brand new ones. It is surprising to see the growth of the used-car market. In just one year, used car prices increased by 30 percent.
Increased prices
Second-hand cars are now selling like hotcakes and are up nearly 30% from where they were last year. This particular market is saturated with vehicles, including cars, trucks, and vans.
In recent years the sale of new cars has been larger than that of used cars. In 2019, only about 17 millions new vehicles were sold, while the market for used cars sold around 40 million units.
Fuel prices are on the rise, as is the price for brand new cars. It has risen 7 percent. The pandemic plays a large role in the increase of car prices. This has caused ripples in the automobile industry.
The pandemic affected rental car agencies as well. To make up for lost revenues, due to travel restrictions that were imposed on the companies, they had to sell off some their vehicles. Fortunately, vaccinations have been widely distributed by the government. While travel is increasing, the car rental agencies are still struggling with a shortage of vehicles. Rental companies cannot provide enough vehicles, so they try to shuffle their current stock of cars around where travelers are most in need.
Chip shortage
Semiconductor semiconductor chips are used to produce consumer electronics as well as vehicles. The demand has soared for cellphones as well as computers, video games, appliances and other electronic devices. The government has implemented homeschooling, and work from home to reduce people’s movement in public areas. Due to these initiatives, the demand for electronics increased.
The auto industry suffered the most from the shortage. The microchips for vehicles are an integral part of the engine computer management system and driver assist systems. Automobile manufacturers struggle to obtain more microchips. The car manufacturers are struggling to get more supplies.
In the third- and fourth-quarters of 2020 the demand for microchips was much higher than the production capacity. Due to this, the manufacturers have a large backlog of orders that continues to exceed their global supply.
Ford and Volkswagen have had to limit production of vehicles, close some factories and layoff workers. Some worry that the disruption might last as long as 2022.
The delay in the production of new cars has led to people looking for alternatives. Second-hand vehicles were in greater demand due to the lack of microchips. Due to the decreased production of brand new cars, secondhand car prices have reached record levels.
The shortage of pickup trucks
According to experts in the industry, the shortage started before the global chip shortage. Many consumers are considering buying a new pickup truck before the COVID-19 viruses becomes an epidemic in the first three months of 2020.
The problem was only with pickup trucks, not other vehicle types like sedans or vans. The pickup truck sales broke records. Dealers didn’t expect this influx, so they cleared out their inventory. End of May 2020 saw a very depleted inventory for the different automakers.
A new problem arose in the auto sector before it was able recover. A microchip scarcity was added to the truck shortage. They are unable to keep up with replacing their diminishing stock and incoming orders of new pickup trucks.
New cars plunge, but used cars soar
In April 2020, according to the Consumer Price Index the prices for used cars increased by 21 percent. By April 2021, the market for used cars will have grown by 10%. Used car demand continues to rise, even though there are no new vehicles available at the dealerships.
Even though the used-car market is larger than the market for new cars, the two are highly intertwined and they work in tandem. The new car market suffered a severe blow, which affected the supply on the market. Most people do not regularly sell their vehicles or terminate auto leases.
The used cars market relies on cars that they purchase off customers, trade-ins, and leased cars. The used car market relies also on the dealers’ inventory.
Even though used car prices have increased, used-EV sales are still growing slowly. Tesla is the manufacturer with the lowest increase in price year-overyear at less than 6 percent. Electric vehicles are a great alternative for anyone who wants to get away from gasoline-powered cars. This increase is partly due to the change in consumer preferences. The sales are rising from month to month. In May 2021, the price increase for EVs was 5.1 percent compared to 1.1 percent in march.
Selling secondhand vehicles
The used car market today is very different to what it was like before the pandemic. The current price is higher than the figure calculated by iSeeCars – an automotive search engine website and research site.
Some dealers are calling recent car buyers to ask for the return of their vehicles. If you’ve bought a vehicle that you dislike, you may want to consider selling it as soon as possible. If you sold your vehicle before the virus, the value would not be as high. Now, prices of used cars are almost 30% higher than they were last year.
Now is the perfect time to sell a vehicle, even if you do not use it or don’t really need it. Even if your car is just sitting in your garage for a few days, the value of it will continue to depreciate. The most popular vehicles today are coupes, convertibles, or pickup trucks.
If you plan to sell your car, ensure that all parts are in good working order. For pickup trucks, you can easily install a new tonneau and replace the wheels and tire. Nitto has many different tire options for your coupe, convertible or other vehicle.
Purchase a Used Car
It’s true that you can buy a secondhand car online or locally. Finding a good second-hand car is difficult. You should be careful when buying a used vehicle. It could have flood damage. The used car market is a good place to look. The market is booming, so you need to be careful which vehicle you choose.
Get multiple offers for your current car to make the most out of the situation. You can use this as leverage when shopping for a car. You can get help from a mechanic or professional to make sure the vehicle that you want to buy is worth it.
New car markets are currently beyond reach
The automakers simply cannot meet demand even if the people are willing and able to buy new cars. They can only provide a limited number through pre-orders for customers who are willing and able to wait.