Customers browse in a used automotive lot on Feb. 15, 2023 in Glendale, California.
Mario Tama | Getty Images News | Getty Images
As not too long ago as 2019, used automotive buyers might discover a 3-year-old automobile for about $23,000. That’s much less doubtless at the moment — when it comes to each age and value.
Pandemic-era manufacturing points have since elevated the typical age of used automobiles offered to six.1 years, up from 4.8 years, in response to car-shopping web site iSeeCars.com, which analyzed greater than 21 million used automobiles offered in 2019 and 2023.
The common value for all used automobiles offered elevated 33% between 2019 and this 12 months, rising to $27,133 from $20,398, in response to the location.
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“Plant shutdowns and limited new car production during the pandemic is still playing havoc with the used car market,” Karl Brauer, iSeeCars govt analyst, mentioned in a press release.
To that time, 58% of gross sales from used automobiles got here from 3-year-old or newer used automobiles within the second quarter of 2019. That determine dropped to 49% within the second quarter of 2023, in response to Edmunds knowledge.
The common transaction value for used automobiles within the second quarter of 2023 was $29,472, down 4.6% from final 12 months’s report peak of $30,905, Edmunds discovered. While costs cooled barely, used automobiles total are nonetheless costly; sticker costs are 46% greater than the second quarter of 2018.
“It’s really not a great time for consumers to be buying cars, whether new or used,” mentioned Paul Waatti, an business analyst at market analysis agency AutoPacific.
How the pandemic affected the used automotive market
Production of recent automobiles dropped precipitously due to plant shutdowns in 2020, 2021 and 2022, elevating demand within the used automotive market at giant, iSeeCars discovered. Car rental company woes added to the issue.
“The used car market has different supply chains, one being rental agencies,” mentioned Ivan Drury, director of insights at Edmunds.
In a typical 12 months, rental companies purchase about 2 million new automobiles after which promote some present stock. But when folks stopped touring in 2020 amid Covid-era lockdowns, companies thinned their fleets within the third and fourth quarter of 2020 with out shopping for new automobiles, Drury mentioned.
“There was no need for them to buy their normal level of vehicles,” Waatti mentioned. “They sold off some of the older models and held onto a core amount of vehicles to get them through the pandemic.”
Rental companies are actually promoting off automobiles which can be about 4 to five years previous, in contrast with the everyday 2-year-old used automobiles that also have warranties left on them.
UAW strikes can have ‘some ramifications’
UAW members and employees on the Mopar Parts Center Line, a Stellantis Parts Distribution Center in Center Line, Michigan, picket outdoors the power on Sept. 22, 2023.
Matthew Hatcher | Afp | Getty Images
Current strikes by United Auto Workers members at three main automotive producers might additionally impression the used automotive market in the long term, as new stock at dealerships dries up and provide chain points trigger sellers to expire of components required for normal upkeep, Waatti mentioned.
When folks cannot purchase new automobiles, they all the time look into used, particularly at occasions like this 12 months, when it’s more and more tough to purchase a brand new automotive, Drury mentioned.
“People are already looking at used vehicles to save money; this just makes the problem more difficult,” he mentioned.
Newer used automobiles which can be coming into dealerships and want tune-ups will likely be ready for these new components for some time, Waatti mentioned.
“There definitely will be some ramifications,” he mentioned.
What to think about when shopping for a used automotive
Here are three issues automotive buyers ought to bear in mind when shopping for an older used automotive:
- Carefully vet a automobile that’s 6 years previous or older: Find the automobile historical past report; you will see detailed info that may let you already know the upkeep and accident historical past, Drury mentioned. If the prior proprietor took the automobile to a restore store or mechanic that doesn’t report the sort of knowledge, you need them to have a “binder of information or receipts” that reveals you the automobile was cared for past simply the norm, he added.
- Look into warranties: Typical warranties final for 3 years, Drury mentioned. Even if the earlier proprietor says the automotive nonetheless has guarantee, double-check with the supplier. “If the vehicle is out of warranty, you can purchase an aftermarket warranty,” he added. However, they differ in price and providers by space as a result of some aren’t legitimate in all states, he mentioned. “Even if you’re looking at something that’s technically outside of the automaker back warranty, you can still go around that if you want that assurance, and purchase an aftermarket warranty,” he mentioned.
- Get preapproval from a financial institution or credit score union to finance the acquisition: As rates of interest are additionally very excessive, attempt to safe some type of pre-approval beforehand from your personal financial institution or credit score union as a substitute of utilizing supplier financing, which is commonly costlier, Waatti mentioned. “Having the pre-approval could save you hundreds [or] thousands in the long run in your loan.”