Why Used Car Prices Are Suddenly Dirt Cheap But Consumers Aren’t Saving
Used car prices have dropped 10% over the past year, but consumers are not seeing any savings due to dealers keeping prices elevated.
Used car prices have experienced a steep decline recently, but dealers are not sharing their good fortunes with consumers. Because America is a capitalistic society they don’t have to. The name of the game is making money and with used car prices low, they can acquire the vehicle cheaply and mark up the prices.
Used car prices are down a little over 10% since last year at this time. According to The Hill, from September to October, prices slid about 2%. These declines showcase the amount of profit car dealerships stand to make.
However, Tesla reportedly cut some of its prices in half bucking the trend of increasing prices. Wholesale price refers to the price that dealerships purchase the vehicle for; the used car price. It is typically understood that dealerships price the vehicle to what the market will bear. Right now, it’s not too much as new care sales are down 32% since 2019.
So why aren’t dealers sharing their good luck? Experts say that this practice is causing vehicle inflation in the used car market. Dealers are making money on used car prices and eventually, it will catch up to them, say experts.
Around the same time, rental car rates are skyrocketing because many of them actually sold their used cars. Right after the Covid pandemic, new cars were hard to come by, so used cars were the hot choice. The rental companies made money on used car prices while people weren’t traveling.
Consumers are looking to purchase new vehicles as they are now getting priced out of the used car market. Because of the rising costs, it’s either cheaper, or a better deal, to purchase a new car. It’s a good time to be a 16-year-old getting their first car! A brand new car will be cheaper for mom and dad than a 10-15-year-old car. That’s a switch.
The prices also have something to do with the announcement that some companies will shift their gazes to solar-powered vehicles. Recent announcements have sent the car sales arena into a tailspin and affected used car prices.
California will not sell gas-powered cars in a couple of years and by the year 2040, there is a high chance that they will be banned everywhere. Used cars will more than likely be available that run on fuel only if folks can afford them.
It was recently reported that Ford will stop the production of its popular Fiesta model in order to focus on EVs. Electric vehicles are more than the future. They are the present. And the sooner those prices end up at a level where folks can afford them, used car prices will be meaningless because most folks will purchase EVs.
So, until EVs are seen everywhere, keep an eye on used car sticker prices. And before buying one, ask the dealership how much they bought it for. Then, go save money for that next affording EV coming down the pike.