That's not "certain." When market conditions change, you'll occasionally be able to get a new car for less than what you'd pay for a used one of the same type. Drastic changes in fuel cost and manufacturers discontinuing an unpopular model are the sorts of things that lead to this situation.
I doubt it with multiple large manufacturers discontinuing cheaper cars and continuing to push up market. If there was a market for cheaper cars, there wasn't enough demand to be sustainable.
Lightly used cars have become far better value than new cheap cars.
The used car market has been pretty strange for the past few years. I’ve been considering replacing my car recently and finding the discount for buying used is way less than it was before the pandemic. I’m seeing some five year old models listed at basically the same price they originally cost new.
A lot of people are no longer buying new cars. Of my groups of friends, only the very wealthy and well paid ones have done so. Half of them very reluctantly because the used car market getting so crazy. In fact a lot of the craziness of the used car market is down to increasingly people can’t afford a new car.
Currently used cars are 'that' significantly cheaper than new. Add in things like interest rates on used being higher than new, and that new cars typically have very long warranties on major components and we're suddenly into the 'Boots Theory' of Socioeconomic Unfairness.
I think what is happening is that in a normal economy, new cars are readily available, and the market for used cars is replenished not only with individual owners selling the cars they originally bought new, but also with off-lease and fleet sales. However, there has been supply chain problems that led to problems in the new car market. Many dealers have fewer cars available (and in many cases dealerships tack on large surcharges), and if you want a car with the exact feature you want, you may need to place a special order, which can take many months to fulfill. If you can wait for the special order, this may be a reasonable approach. However, many people on the car market need a car immediately. Thus, with the problems facing the new car market, more people are looking at used cars. But with increased demand combined with decreased supply, used car prices have skyrocketed. I also imagine that the demand for fuel-efficient cars and EVs will increase due to very high gas prices.
I don’t imagine the situation returning to “normal” until the supply chain issues are resolved. Even then, it will take a while for used car inventory to get replenished. This is anecdotal, but in my experience price inflation tends to stick; unless there is a glut of cars, I don’t expect used car prices to drop to pre-pandemic levels.
Things certainly did go crazy for a while, mainly due to supply chain issues that reduced the supply of new cars for sale. So people bought more used cars, driving the prices up. That's starting to correct now that new car supply is getting more plentiful.
Even a 15 year old car without major issues is hard to find for less than about $5,000 USD where I am though, which is more than I've paid for a car in quite a while. You can find cars for less, but they get ugly pretty quickly.
Yeah true... there will be a glut of used cars. Therefore more people can afford to get a used one, which will lower the brand premium they've been enjoying.
Is that still true? I feel like that used to be true, but not anymore. Since the 2008 recession (and the "cash for clunkers" program) every time I've tried to crunch the numbers, a 1-2 year old car is only 5-10% cheaper than a new one instead of 25%-50% cheaper. Maybe it's the specific cars I was interested in? I figured the economics of used cars had just changed.
We won't really know until it happens, of course, but perhaps the glut will be new cars, not used -- if a lot of people change their purchase decision from a new car to a used one to save a few bucks.
Why would used cars drop in price? Since no one is buying new cars there's no supply of used cars. Lower supply means increased prices but demand is probably down as well so almost no change.
A lot of people can’t afford a new vehicle at current prices and many can’t afford used vehicles either. I suspect there will be a price collapse in the next year or two.
Part of the problem, in America at least, is what a minimally viable car is these days. You can’t really find compact cars. I believe there is still the Mistubishi Mirage and the Nissan Versa, but most cars are at least 30 grand new.
Exactly. That's clearly not sustainable. Either new car prices will keep going up or used car prices will plummet. I think the latter is much more likely.
Not anymore. The used car market is absolutely bananas. I was looking at used small SUVs in the $30k cad range. A 5 year old Mazda or Toyota was going for $5k off of original msrp. There was a 2021 low mileage Subaru going for the same price as new.
COVID did some wacky shit with the car market. The upside is that my junky old pathfinder is worth more than I paid for it in 2019
it used to be you could find a 20 year old, serviceable used car for sub 2500 dollars, now get something serviceable and running, it's closer to double that.
Even when you adjust for inflation, the price for a cheap used car is 30-40% higher than it was a decade ago.
OK, then the question just becomes why people don't settle for older cars until that drives the prices into a new equilibrium where the choice isn't as obvious any longer.
Definitely. Not many deals to be had anymore. A lot of this is due to short supply (supply chain issues with chips, strikes, etc.), but some of it is also due to cars being so much more reliable now (and therefor more valuable even when used).
I don’t understand the downvotes. Your conclusion is wrong but you make a good contribution. Thanks for the anecdata.
I too have seen this phenomenon, and I think it’s pretty common recently because the used car market is really out of whack. In my case, last year I bought a lightly used Sonata for about $30k with 12k miles, and today I could still trade it for about the same price with 31k miles on it.
Where you’re wrong is that this phenomenon doesn’t apply in general to the used car market but only in the last few years because of the chip shortage shrinking the supply of new cars. Short supply in turn increased demand for used cars, raising the prices.
Used cars prices are turbofucked for a good 5-6 years. You can't just magically poof into existence all the cars that weren't produced in 2020, 2021, and beyond.
In 2009, new car production halved and it wasn't until 2015 that new car production finally matched the 2007 peak. Meaning the USA lost out on about 45 million cars which would have been produced during those six years. As a result, used car prices were elevated for quite a while. I bought two new cars in 2014 and a new 2014 model was priced at the same as a used 2012 model, and 2010 models were barely discounted.
The USA has a strong "used cars = better deals" culture. So people don't generally buy cheaper cars new, they buy more expensive used cars for a similar price. This has lead to a nearly complete removal of the cheap car segment, meaning that there very few cheap new cars that people can purchase. Which means we need a 3-4 years of good new car sales in order to start really driving down used car prices.
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