Clients browse in a used automotive lot on Feb. 15, 2023 in Glendale, California.
Mario Tama | Getty Photographs Information | Getty Photographs
As not too long ago as 2019, used automotive buyers may discover a 3-year-old automobile for about $23,000. That is much less probably right this moment — when it comes to each age and value.
Pandemic-era manufacturing points have since elevated the common age of used automobiles offered to six.1 years, up from 4.8 years, according to car-shopping site iSeeCars.com, which analyzed greater than 21 million used automobiles offered in 2019 and 2023.
The typical value for all used automobiles offered elevated 33% between 2019 and this 12 months, rising to $27,133 from $20,398, in keeping with the positioning.
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“Plant shutdowns and restricted new automotive manufacturing throughout the pandemic remains to be taking part in havoc with the used automotive market,” Karl Brauer, iSeeCars government analyst, mentioned in a press release.
To that time, 58% of gross sales from used autos 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 keeping with Edmunds data.
The typical transaction value for used autos within the second quarter of 2023 was $29,472, down 4.6% from final 12 months’s file peak of $30,905, Edmunds discovered. Whereas costs cooled barely, used automobiles general are nonetheless costly; sticker costs are 46% greater than the second quarter of 2018.
“It is actually not a good time for shoppers to be shopping for automobiles, whether or not new or used,” mentioned Paul Waatti, an business analyst at market analysis agency AutoPacific.
How the pandemic affected the used automotive market
Manufacturing of latest automobiles dropped precipitously due to plant shutdowns in 2020, 2021 and 2022, elevating demand within the used automotive market at giant, iSeeCars discovered. Automotive rental company woes added to the issue.
“The used automotive market has completely different provide chains, one being rental companies,” mentioned Ivan Drury, director of insights at Edmunds.
It is actually not a good time for shoppers to be shopping for automobiles, whether or not new or used.
Paul Waatti
business analyst at AutoPacific
In a typical 12 months, rental companies purchase about 2 million new automobiles after which promote some current stock. However 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 autos, Drury mentioned.
“There was no want for them to purchase their regular degree of autos,” Waatti mentioned. “They offered off a number of the older fashions and held onto a core quantity of autos to get them by the pandemic.”
Rental companies are actually promoting off autos which can be about 4 to five years outdated, in contrast with the everyday 2-year-old used autos that also have warranties left on them.
UAW strikes could have ‘some ramifications’
UAW members and staff on the Mopar Elements Middle Line, a Stellantis Elements Distribution Middle in Middle Line, Michigan, picket exterior the ability on Sept. 22, 2023.
Matthew Hatcher | Afp | Getty Photographs
Present strikes by United Auto Staff members at three main automotive producers may additionally influence 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 instances like this 12 months, when it’s more and more troublesome to purchase a brand new automotive, Drury mentioned.
“Persons are already used autos to save cash; this simply makes the issue tougher,” he mentioned.
Newer used automobiles which can be coming into dealerships and wish tune-ups shall be ready for these new components for some time, Waatti mentioned.
“There undoubtedly shall be some ramifications,” he mentioned.
What to contemplate when shopping for a used automotive
Listed here are three issues automotive buyers ought to have in mind when shopping for an older used automotive:
- Rigorously vet a automobile that’s 6 years outdated or older: Discover the automobile historical past report; you will see detailed data that may let you understand 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 this kind of information, you need them to have a “binder of data or receipts” that exhibits you the automobile was cared for past simply the norm, he added.
- Look into warranties: Typical warranties final for 3 years, Drury mentioned. Even when the earlier proprietor says the automotive nonetheless has guarantee, double-check with the seller. “If the automobile is out of guarantee, you should purchase an aftermarket guarantee,” he added. Nonetheless, they differ in price and providers by space as a result of some aren’t legitimate in all states, he mentioned. “Even for those who’re one thing that is technically exterior of the automaker again guarantee, you may nonetheless go round that if you’d like that assurance, and buy an aftermarket guarantee,” 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 individual financial institution or credit score union as a substitute of utilizing seller financing, which is commonly dearer, Waatti mentioned. “Having the pre-approval may prevent lots of [or] hundreds in the long term in your mortgage.”
