If you’re in the market for a used car, but just can’t seem to find one. You’re not alone. While the COVID19 pandemic has had a negative impact on world economies and has been responsible for shutting down entire industries, turns out, the used car industry was one of them.
Although the used car market hasn’t shut down completely, it’s easy to see that used car dealerships are struggling to keep up with the growing demand for used cars. So, is the hype real? We’re going to find out just that.
Popularity Of Used Cars During COVID-19
In the flurry of excitement around cutting-edge electric automobiles and blinged-up pickup trucks, used cars are sometimes forgotten. They’ve suddenly become the trendiest item in the industry.
During the coronavirus outbreak, people are buying secondhand automobiles as a second or third car to avoid taking trains, buses, or Ubers. Others prefer to buy old rather than new to save money in an unpredictable economy, as they don’t know when they or their spouse would lose their jobs. The demand for older automobiles has also been fueled by a two-month stop in new car manufacturing this spring.
Used automobile costs have risen dramatically across the country. The rise challenges popular belief that automobiles are depreciating assets that lose a significant portion of their worth the moment they leave the showroom. The average value of secondhand autos increased by more than 16 percent in July alone.
According to Automotive News, automakers in North America produced 6.6 million automobiles and light trucks in the first seven months of the year. They made three million less in the same time of 2019 than they did in the previous year.
Carmakers provided no-interest loans for as long as 84 months to entice purchasers early in the epidemic, when many people avoided leaving their homes for all but the most basic requirements. Due to limited new-car inventories, such large incentives have all but vanished. People who have a car to sell, on the other hand, still have some bargaining power. The high demand for old automobiles has boosted trade-in values, which has benefited some car purchasers.
AutoNation, a 325-store company in the South and West, has started purchasing automobiles from anybody who takes a vehicle into one of its locations – whether or not the owner is looking for a new one — and sellers are given cash on the spot. According to Marc Cannon, an executive vice president at the firm, it bought more than 3,500 used automobiles in July, up from the 2,000 it usually buys in a month.
Used auto dealership owners are constantly looking for used automobiles for sale, explaining that they’re even running advertisements on the web and Facebook. Because business is so brisk, low-mileage secondhand automobiles don’t last long on dealer lots.
Because there aren’t that many new automobiles to pick from, other shoppers have drawn toward used cars. Despite the fact that automakers have reopened their operations after a 60-day hiatus from late March to mid-May, they have not made up for lost time.
Furthermore, many Americans are aware that they will not be purchasing a rattle trap that is continually in the shop. Recent cars and trucks are better built than those from a few decades ago, and certainly better than the ones that Ralph Nader decried in his 1965 book “Unsafe at Any Speed.” Many individuals have been taken aback by the increased desire to possess a vehicle, while others are concerned about what it means for the future of cities and transportation.
The secondhand automobile market in the United States is already projected to be worth $41 million every year, and Chamoun predicts that some of the changes brought on by the epidemic will continue to accelerate. He claims that the robustness of the used car market demonstrates that Americans continue to desire to own cars, whether to take their children to soccer or to go to work. “Vehicles are the second most expensive item we buy as consumers, so it’s critical and will continue to be critical for the economy.”
A prominent feature of the coronavirus economy across sectors has been the compression of digital acceleration targets from years to months, and in the car sales industry, more dealers are accepting the move to digital, Chamoun said, which is a big behavioral shift for the market.
Selling Cars Online
For a long time, used car dealerships were using physical auctions and business changes don’t happen overnight, but when dealers were suddenly unable to attend a physical auction, their behavior shifted, and more of the market was willing to sell digitally, as well as bid on and buy vehicles online. Dealers’ migration to digital is accelerating in both supply and demand. Over the next three years, used car sellers will see a greater shift to digital. It doesn’t mean that automobiles won’t be on a lot, but it does imply that dealers will.
The practice of selling cars over the internet is not entirely new. Before Covid-19, specialty automobiles were offered on platforms like eBay for years, and dealerships could sell cars online in a frictionless experience. In a down economy, more people are looking for old automobiles, and the new internet models provide something that local dealers generally don’t: a wide range of models and unique features that can be transported across states. It’s been made a lot easier when it comes to availability, inventory, and shipping across states. Even if customers intended to buy from a local dealer, there was a severe shortage of used automobile inventory.
The internet experience also eliminates the “high-pressure circumstances” that many buyers prefer to avoid when dealing with dealers. On the internet, you have complete control over the flow. The ability to separate aspects of the car buying and selling process, such as trading in a current vehicle and adding it to the used car market, is one example of this control advantage. You don’t have to go to a dealership to do it now because you can do it online.
