Used Car Shortage
The strong demand for cars, along with the shortage of new vehicle supply, is causing the used pickup prices to increase drastically. As the economy is slowly recovering from the trauma caused by the pandemic, the availability of new cars is questioned by the shortage of semiconductor chips. This has, in turn, triggered the rise in demand for used cars globally. The chip shortage can be attributed to the sudden halt in production due to the COVID pandemic and how the demand is increasing due to the computerization of the car manufacturing process.
A wholesaler in Manheim reported that the wholesale price for a pickup hit as high as $30,093 from $17,201 last April when the industry was flooded with used cars. The average value of used cars traded in for the purchase of another vehicle hit an all-time high in the mid of March 2021.
What triggered the sudden rise in demand
While the prime cause is the global shortage faced for semiconductor chips, which in turn halted the auto industry’s normal manufacturing schedule of new vehicles, less availability of new rides is also urging people to go for second-hand vehicles. Other factors that triggered the sudden rise in the demand curve include the proliferation of larger and heavier vehicles like SUVs and pickups, which are comparatively expensive than passenger cars.
The market for used cars is pretty high as well. Within a span of a month (February to March), there was a record increase of 36% in sales, thereby reaching an all-time high of 286,061 cars. Compared to March 2020, when the lockdown initially started, there was an increase of 117% in the sales of pre-owned cars in march of 2021. Also, the new car inventory fell by a notable 15% when the chip shortage started becoming prominent again.
According to the Manheim chief economist Jonathan Smoke, this drastic increase should be reflected in retail prices within six to eight weeks. “This is fundamentally the most extreme demand and supply imbalance that you can envision happening, “he was reported saying.
As the economy is healing, stimulus payments and tax refunds are carving out an ideal storm that drives demand for these pickups and thereby increases the prices. Smoke expects the things to taper off by the mid-of July, but he added that the prices wouldn’t come back to normal anytime soon. With more cars on the road, there is a higher chance of accidents waiting to happen. Siro Smith Dickson has a skilled Kansas City Car Accident Attorney to help you if you’ve found yourself in a tricky situation. Call their office today if you’re in the Kansas City area.
Final Verdict
The demand for pre-owned cars is at an all-time high time. Some say it’s the best time to trade in your old cars and gain some money. While a lot of factors caused the sudden increase, the prominent may be the need for safe transportation during this raging pandemic. With public transport becoming no longer safer, people are switching to used cars to cater to their transportation needs.
