If you’re shopping for used cars, chances are good you’re feeling the effects of sticker shock right now. Especially if you started looking before the COVID pandemic and put things on hold when we all went into lockdown.
Prices on pretty much everything jumped in the last couple of years. But why has it hit the automobile especially hard?
It’s Not the Dealers’ Fault
We get it. Going all over town trying to find a quality used car is exhausting. Especially when you’re trying to haggle the dealer down to a price that better fits your budget, and their manager won’t budge.
While it’s tempting to yell at the salesman, you should know that they’re feeling the strain, too. The tight market is putting the squeeze on everyone, dealerships included.
So, Who—or What—IS to Blame for Used Cars Prices?
At this point, it probably isn’t a huge surprise, but the finger points squarely at COVID-19 and its multiple variants.
In the early days of the lockdown, the pandemic shut down automobile assembly lines, shipping, and dealer showrooms. While dealers were able to pivot to virtual showrooms, restarting production proved more problematic.
With millions of office workers setting up home offices, the demand for computers, printers, tablets, and smartphones skyrocketed. All of this equipment requires computer chips, which meant that chip makers began reallocating their supply from automobile systems to home office devices.
Computer Chips are THAT Important?
In a word, yes. Modern cars are much like a network of computer systems, from driver assistance technology to infotainment and navigation and many more. A vehicle can have hundreds, even thousands, of computer chips powering this network of controllers.
So, when chip makers curtailed their supply, automakers had tough choices to make regarding which assembly lines would restart.
But How Does the Chip Shortage Affect USED Cars?
Once lockdown restrictions eased, and people started heading back to work, a lot of folks realized they needed to upgrade their ride. With a lot fewer available new cars, people headed to the pre-owned lots.
If you remember your lessons on supply and demand from school, you know that the pressure on the used car supply led to a jump in prices (not to mention a lot of empty lots).
But the chip shortage affects used car prices in other ways. Many used vehicles require work before the dealers offer them for sale. With fewer available computer chips, replacement parts are much more expensive. And those costs get passed on to car buyers.
How You Can Make This Work in Your Favor
The high cost of used cars doesn’t have to be all bad news. Are you thinking of trading up or selling your vehicle? The good news is, with a heavy demand for used cars, you can command top dollar for your old car, especially if it’s in good condition.
Getting a good deal on your used vehicle can go a long way to ease the pain of sticker shock at the dealership.