How Hot is the Used Car Market in 2021

Used Car Market in 2021

The market for used cars recently has experienced a record number of sales. That contributes to the used market outshining and becoming broad than its counterpart new. Based on studies, approximately 40 million used vehicles have been sold this year, compared to the 15 million new cars. So what makes the market for used expand and defeat the one for new? The used market consistently grows since it relies on stock inventory from many channels. The used market has many channels that feed it with stock. Most individuals and companies looking to dispose of their old vehicles rely on the used market. Some companies like rental car firms and others specializing in a large fleet of cars frequently dispose of their old models for new models. Due to the global pandemic, many car enthusiasts cannot afford some new car models in the auto market. They resort to choosing used because they are sure they can find a quality vehicle slightly used at a lesser price. The pandemic is responsible for the sudden shifts in customer behavior that translates to inflation since businesses struggle to adapt to the changing demand. All these factors and more contribute to making the used car market consistently grow and expand than its counterpart market.

Used Car Market

If you’re looking to get a good deal this year on any used vehicle model, chances are lower you will secure a quality car that suits your needs and budget. The market for used is hot right now than ever. That is because there is a shortage of new vehicles currently. That has led to high demand for used cars by up to 12% this year alone. The rising demand for secondhand cars makes most traders put abnormal selling prices for the used models they want to dispose of in the auto market. The high demand for used models outweighs that of supply. That is why you’re experiencing higher price tags than before. It also might make a difference depending on your area. Whether you are car buying in Canada or shopping for used cars in Detroit, the area you are in might influence the price.

What Makes Used Vehicles So Much Expensive in 2021?

Many factors such as the global pandemic and higher prices affect the new-vehicle market. Different automakers produce few vehicles often. That makes the supply for new vehicles lower than the demand. Most people don’t choose the new market because of the pricing factor. Some choose used over new because they know they will get a quality vehicle that has already been through the severe depreciation period. Immediately you drive off a new car from a dealership, it will lose about 12% of its value. New cars tend to lose as much as 25% of their value during the first year of ownership. That’s the reason most buyers consider buying a secondhand vehicle since they know they will not be affected by the severe depreciation period.

A Record Shortage of New Cars

There is a shortage of new cars encountered worldwide. That is due to the auto assembly lines directing most of their vehicles to rental agencies looking to lease them for a certain period. Some rental companies also buy many new vehicle models every year. They then choose to dispose of them after only one or two years of use. On average, rental companies buy about two million new vehicles every year. They then sell them later at a significantly reduced price in the used market and replace them with newly released models.

Light at the End of the Tunnel

Though the problem has been throughout the year, the rising prices seem to have hit their maximum point a few months ago. Since May, the wholesale prices for new vehicles have been slowly declining. That is because the rental industry has been affected by the pandemic such that they cannot afford to buy cars in bulk as they used before. Many speculators expect the retail prices to start following the trend soon. Most car buyers who have shifted to the used market will eventually realize that prices for new vehicles are gradually dropping. That will likely push them to start exploring the new vehicle market for better deals. The demand and supply for new cars will finally achieve equilibrium levels. That will make the new vehicle market stabilize and perform much better.

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