Why are used cars expensive now? And when will prices come down?
I recently covered this topic, and a recent Business Insider article validated what I have been saying over the last couple of months.
Used cars are expensive right now due to the new car market and its chip shortage problem. The manufacturers have been facing product problems, not being able to keep up with demand. Therefore, someone originally planning on purchasing a new car is now going for a used car.
The new-car inventory in the US was down 54% in June compared to June 2019, and prices for these new cars have hit all-time highs.
Rental car companies are needing vehicles again since traveling has picked up again. Many agencies were selling their rental vehicles en masse, trying to survive 2020. Now, these companies have been forced to compete in the used car market as well.
People who normally lease vehicles are choosing to buy their leased vehicle rather than swap out for a new lease.
People are holding on to their old vehicles. Thus cutting off a source of vehicles to the used car market.
A senior manager of insights at Edmunds said, 'I'd say give it at least six months. And in all honesty, if you can hold off for an entire year, you're better off with that."
I have been projecting one year to one and half years for the ideal waiting. These markets are not going to catch up immediately once the chip situation is under control again. It will take time for all these different inputs to reach equilibrium, and prices return to something "normal". If you're trying to get a good deal it's likely that won't happen until then.