The Used Car Market when will it Recover?
Wholesale prices of used vehicles reached their lowest level in more than a year, as retail sales decline amid interest rate hikes, rising new vehicle availability and fear of recession. If you’re looking for a used car it may not be in the market for consumers in these times. If you have faced these challenges lately then you know how hard it can be to find one. There are several factors that play into this factor. The used car market has been projected to be on the downward fall until the year 2025. Why? Here are a few reasons to consider maintenance on the car you have until you absolutely have to buy a new make that move.
It’s something no one wants to hear but, the car industry (both the new and used-vehicle markets), have seen prices skyrocket in 2022, and the prediction is…that it won’t recover for three more years. Although the prices did drop this past September on used cars…finding one is another story. Consumer demand has spilled over into the used car market. Auto assembly lines are fixing their supply chains to meet demand but it’s not enough that will impact it any time soon. The used car market has peaked and now finding a decent one that is not over-priced is not so easy. This is not a quick fix. The challenges that auto makers and dealers have faced are:
Popular car part distribution is down which leads to short supply
Interest rates are going up on consumer loans so consumer demand will decrease
Shortage of Semiconductors
Automotive chips are in demand
During COVID pandemic people leased cars instead of purchasing them declining to exercise their right to purchase them
Electric cars: lithium, nickel, and cobalt are crucial elements of electric car batteries, and their prices have skyrocketed, which means electric vehicles prices will be impacted by growing material costs.
No incentives or discounts on new cars until the supply shortage is recovered
Fewer lightly used vehicles will flow into the used car market as trade-ins later because new cars are not available. People then look to used vehicles. With fewer new vehicles on dealer lots, more people will look to buy lightly used vehicles, one- to three-year-old versions of their preferred models. Which means that, eventually, fewer lightly used vehicles will flow into the used car market as trade-ins in 2025. Be patient.
That’s millions of vehicles that would have hit the used car market in the next two to three years, now won’t be those future used cars hitting the market due to those factors listed above choking out the availability of used cars.
If you can afford a new car great. But, if you are in the market for a used car and your car is still in good working order, take good care of it and make it last as long as possible until the used car market finds some consumer relief, such as lower rates, less demand, and a stronger economy. In due time the used new and car market will take a turn for the better. In the meantime, visit your local auto shop and be sure to check into a car maintenance plan.
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