COVID-19 has dawned upon us and changed the course of our lives. It has jolted industries and businesses. Just a couple of months ago, in April, an expected downfall in the prices of used cars was reported by Bloomberg. This was said to be a result of the auto factories being shut and decrease in demand of new vehicles.
Now, let us judge how true Bloomberg’s interpretation was and how viable is it to buy a used car during the pandemic.
Used cars’ prices have been going high since May 2020. Joe Akers, director of operations at Cowles Nissan in Woodbridge, Virginia, said;
“At the beginning of COVID (and even now), auto auctions closed, which typically are huge used car sellers, and their pause in operations created a massive surplus of inventory,” he said. “Pairing that excess inventory with the nation full of economic uncertainty, used car prices dropped dramatically in April. They reached the bottom towards the end of May. In the past 30 days, however, used car prices have risen substantially as demand has increased and new vehicle supply has dwindled.”
It is said that the prices can go even higher. New cars are not being produced hence the dealerships are depending on sale of used cars to get profits. Paul Maloney, owner of Car Leasing Concierge, said;
“On average, used car dealers mark up their vehicles with a $4,000 profit built-in, but now they’re getting greedy and taking full advantage of the situation, marking them up for a profit ranging anywhere from $6,000 to even $10,000.” Maloney added, “Buyers can research the car model by simply going onto Kelly Blue Book or Edmunds.Com to see what the average price was before the pandemic hit.”
Do not get fooled by an attractive low price of a used car. There might be a hack by which the dealer might make a wholesome profit from you.
Bob Garrow, founder of Car Buyer Class, LLC, said;
“What I’m seeing is that there has been a drop in the advertising price of used cars. I can tell you why we do that — it is to get more people interested in contacting our dealership. In sales and finance management though, there are a dozen other ways that we can make money on selling a car besides just the price. If anything, even though you’re seeing a reduction in advertised prices, due to the drop in overall sales volume, dealer teams will be more aggressive in maximizing profits on the people who do actually contact the dealership.”
There are not a lot of dealers that are giving out attractive deals. Sean Pour, co-founder of the car-buying service SellMax said;
“The used car market is hotter than usual — so it’s probably not the best time to buy if you’re looking to get a good deal. I personally know dealers who were selling 40 cars a month that sold over 78 cars this last month,” he said. “It seems like many people are using their stimulus checks to buy used vehicles. Seeing that the market is doing really well, I would say right now is not the best time to buy a used car. I actually believe the best deals are on new cars at the moment, as dealerships are looking to move this year’s models.”
“Supply and demand are not in consumers’ favor,” said Lauren Fix, The Car Coach. “Even the auction lanes that are running virtually or in-person are selling cars above book value.”
It is expected that the price of used cars might fall down again soon. “If you can afford to wait, I think that the used car supply might actually improve in the next few weeks or months,” said Richard Reina, product training director at CARiD.Com. “This will stabilize prices, even if it doesn’t necessarily drive them downward.”
Buying a used car in Pakistan amidst the pandemic
There are pros and cons to it. You may get a lower price for the car, but it can be really a health hazard if you aren’t extra careful about disinfecting the car. However, it’s a good time to save some money by buying a used car in Pakistan. But wait for the time when the prices are low. Otherwise, it might not be a wise decision.