You may have preferred riding buses or trains to get around for years. However, the COVID-19 pandemic drastically changed how people move from one place to another. With social distancing protocols, taking crowded public transport might be more trouble than its value. It became convenient to drive your own car to minimise contact with others. However, buying a new vehicle can be costly, resulting in an increase in used car buyers.
What’s with the increasing prices of used cars?
Cars depreciate as soon as they leave the dealership. Yet you might find specific makes and models with higher prices than when they were at the dealership. If you check a car’s price back when it first came out, you might be surprised to know that it may be more expensive today, even as a used vehicle.
A used car is usually cheaper than a brand-new one, but that was before COVID happened. During the pandemic, the cost of used cars increased because of the higher consumer demand and global chip shortage. Those factors resulted in a price increase for second-hand vehicles at dealerships everywhere, frustrating used car buyers.
The price increase for used cars is unprecedented. Some models can be more expensive than their brand-new versions because of the shortage of microchips. The lack of parts means manufacturers aren’t building new cars. So, if you have an almost-new car, its value may be more than a brand-new car, which you would have to wait for at least six months before it can be yours.
Prices continue to increase.
Car manufacturers ceased or limited their operations at the onset of the COVID-19 pandemic in 2020. However, the demand for vehicles increased as consumers didn’t want to use public transport. Some cities also stopped or limited public transportation to encourage people to stay home. These factors encouraged more used car buyers, but they also caused the price increase for such vehicles.
Are microchips really necessary?
There may be older and no-frills vehicle models around. Perhaps you’ve even used one or two in your lifetime, making you wonder about the relevance of microchips. However, many modern cars use hundreds of chips for many purposes, including air-conditioning and seat adjustments. Car makers are trying to compensate for the shortage by minimising the need for chips, but that will take time. Some manufacturers may even be considering an analogue dashboard.
But the borders are reopening, and more people are returning to their workplaces. Does that mean used car prices will go down?
At this point, used car buyers may feel optimistic about prices returning to their pre-COVID values. After all, work has resumed globally as people are getting used to the ‘new normal.’ However, car manufacturers are experiencing what experts call ‘long COVID.’
When the car makers cancelled their microchip orders, chip manufacturers focused on other things, such as TVs, video games, and electronics. So, when car manufacturers resumed operations, they were placed in a long queue. The situation between Russia and Ukraine also caused a setback in chip manufacturing, as 50 per cent of high-grade neon for making microchips come from the latter.
Will this affect our need for cars overall?
Used car buyers are not only dealing with high prices. They have to consider the high cost of petrol and insurance. So, many will have to think whether they truly need a car or find alternatives, such as an electric scooter or a bike. The first signs of declining car ownership are already prevalent in cities, particularly among young consumers.
What about electric cars?
Some car buyers may consider purchasing an electric car to avoid paying for expensive petrol now until they realise it doesn’t come cheap. However, we can only hope for the price of electric vehicles to decrease down the line as they become more available and cheaper batteries are being made.
Will used car prices eventually decrease?
Used car buyers might have to wait until that happens. Eventually, used cars will become affordable once more as new vehicles are made and introduced into the market. However, that may take time as the supply chain is being replenished and new microchip manufacturing facilities have yet to start operating to combat the global shortage. Many automotive experts believe the chip shortage may be resolved sooner, and newer cars can continue their assembly process as usual.
Can’t wait to buy a new car?
When the market supply meets or surpasses demand, the prices of used and new vehicles should decrease. However, not all used car buyers can wait. In the meantime, you can approach a licensed and insured car removal company for options. It might have the car you’re looking for at a fair price.
Or, if you have a car just sitting in your garage and waiting to be fixed, check with licensed auto wreckers for used parts you can purchase for cheap. That way, you can repair your vehicle at a more reasonable cost and don’t have to wait long to get the required parts. It may be an old car, but at least it will help you get around conveniently and safely.
Once the market eases and you can afford a new car, consider selling your unwanted vehicle to us. Amazon Cash For Cars are licensed used car buyers in Sydney, and you can call 0422 784 920 whenever you need an estimate. We can pay up to $9,000 for used, unwanted, and old vehicles depending on their condition and accept all makes and models. Our car removal service is free, including the paperwork and removal, and we will pay on the spot before we take the vehicle.