The used car market has been through some significant changes in the past year. Ever since the summer of 2020, used car prices are rising, a phenomenon that has been tied to the effects of the COVID-19 pandemic. While used vehicles have always been a popular option for consumers who don’t have the need or means to splurge on a newly-manufactured vehicle, recent trends within the used car market suggest that these vehicles are rising in popularity as an option for buyers. If you’re considering a career in the automotive industry, your knowledge of the trends influencing the used car market will be valuable when it comes to helping customers make an educated decision in the purchase of a vehicle. Below, discover the recent trends within the used car market.
The Pandemic’s Influence on the Used Car Market Explained for Those with Careers in the Auto Industry
While it was uncertain whether the COVID-19 pandemic would bode well for the used car market in the first few weeks of lockdown, by the beginning of the summer of 2020, used car sales began to increase – with sales trending at higher levels than they were even pre-pandemic. As professionals with careers in the auto industry may know, the higher sales can be attributed to several different factors, including a change in consumer behaviour as a result of the pandemic and a shortage of newly manufactured vehicles. Below, explore a more in depth look at the influence of these factors on the used car market.
Changes in Consumer Behaviour are Driving Market Changes
The lockdowns and closures that accompanied the pandemic had a significant impact on consumer behaviour, as people everywhere were forced to adapt to a new way of life. Commuters who formerly relied upon public transportation began to consider purchasing a vehicle due to safety concerns associated with COVID-19. Additionally, reduced opportunities for travel have pushed consumers in the direction of the used car market, given the freedom of transportation offered by a vehicle. In the weaker economy that resulted from the pandemic, consumers were also more motivated to purchase a used car instead of a newly manufactured vehicle in order to save money.
Scarcity and Demand Have Impacted the Pricing of Used Cars
While changes in consumer behaviour can be attributed to some of the trends within the used car market, the scarcity of newly manufactured vehicles is another factor driving this trend. Those in auto careers have noted that a microchip shortage has negatively affected the production of new vehicles, driving buyers to opt for used vehicles instead. With fewer new cars being sold, there are also fewer vehicle trade-ins happening, meaning that consumers are extending their leases on vehicles. Given the scarcity of new vehicles and the changes in consumer behaviour as brought on by the pandemic, the prices of used cars have increased significantly since the summer of 2020, driven by increased demand. While prices are slowly beginning to return to normal, used cars are expected to be high in demand for years to come.
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