04/18/2022
How did the used car market get so topsy-turvy?
How long will this go on? Should I wait to buy a car for the prices to “go back down”?
Am I crazy to trade my car in now?
It’s a much more complex answer than one might expect. Simple answer is semiconductor shortage that led to a New Car shortage driving demand for late model used cars.
The more detailed answer starts with Semiconductor fabrication supply chain. Too heavy of a reliance on S Korea and two main fabricators that supply a goodly portion of what the planet needs for chips. When Covid began forcing lockdowns it decreased both the silicon supply used to make the chips and the fabrication of those chips. So we are left with a severally decreased supply of silicon semiconductors.
You couple that supply issue with the Auto industry developing so much more technology into the cars safety systems and voila‘ you are staring at the void that New Car Dealers are suffering through.
One thing that many, if not most consumers haven’t yet recognized is that the new car deficiency that has now gone on for almost two years is not nearly done, and will leave a lasting bubble that will become the used car deficiency for however long this current problem persists.
This leads to the answer of “Should I wait until prices go back down?”
No. Unless you want to wait 3-5 years and even then it’s a crapshoot. Then you factor in the inflation, the usual price increases and the still lingering aforementioned problem and you may very well pay more then than now. Even after factoring out the normal rise in prices.
The one positive out of this is for someone considering trading in their current ride. Those values are also at all time highs. There are documented cases of owners getting more than they paid for a particular vehicle 3-4 yrs later. Toss in the stories of the new car owners selling their cars/trucks/SUV’s back to the dealer and getting a check for more than they gave the dealer as short as 6 months ago, and you have a clear answer. In fact the smart owner who has multiple cars is selling the 3rd car or 4th car they own now to capitalize on the market.
Just my take on tjis of course but I can’t believe I’m too far off.
Remember, whether I sell you a car or not, I am always available to help you through a transaction
