The Used Car Market in 2021 Was Unlike Any Other

The last couple of years has been a bit out of the ordinary, to say the least. The global pandemic wreaked havoc on many industries, including the automotive market. New vehicles were nearly impossible to find, and every car dealer in town had signs up saying “we buy cars.” Needless to say, the used car market was nothing short of nuts.

What Caused The Used Car Market To Change?

Everyone who has taken a business class is aware of supply and demand. In a perfect world, when demand for something goes up, the supply increases to meet that demand. When the supply is high, and the demand is low, prices go down to help move inventory. When the demand is high, and supply is low, prices go up.

The COVID-19 pandemic took a real shot at the auto industry. When the first wave of infections hit the globe, automakers canceled part orders in fear that people wouldn’t be shopping for cars. This ended up being the wrong move as people across the world yearned for their own sets of wheels. Some people wanted to avoid crowded public transportation, while others moved away from the cities to areas where a car was necessary.

The demand for cars didn’t go down as expected. The supply of necessary parts, however, dwindled. Computer chips, for example, are an integral part of modern vehicles. These computer chips are also part of video game systems, cell phones, computers, and more. The demand for these electronics skyrocketed as people were now telecommuting to work and looking for something to keep themselves occupied. Auto manufacturers were now competing with other industries for parts, which meant new cars were being delayed. On top of a backorder of computer chips and semiconductors, the pandemic also led to several supply chain delays.

Ultimately, new cars weren’t available for most of 2021. There were a few options here and there, but nowhere near enough to meet the demand. When new cars weren’t an option, shoppers started looking at used cars. As demand for used cars went up, the price of these vehicles also rose.

Crazy Used Car Market Prices

For the first time in history, it wasn’t uncommon to find a used car that was actually more expensive than its new counterpart. People wanted to buy cars, and dealerships had limited inventories. That meant dealers could raise prices to make a better profit.

Of course, used car inventories were also low, so dealerships had to find a new source to increase their dwindling selections. That’s when we started seeing “We buy cars” promotions. Dealers were willing to pay top dollar to purchase pre-owned vehicles. They would then restore these vehicles to essentially flip them.

Drivers who were looking to make a buck were drawn to these “we buy cars” promotions. Savvy shoppers would also take advantage of high trade-in values to get a leg up on their new car pre-orders, so long as they were willing to wait.

What Does 2022 Look Like?

It’s hard to say exactly when and if the market will go back to normal. The supply chain hasn’t completely caught up, and new cars are mostly absent from showrooms. For the moment, used cars are still a hot item. That means you can expect to pay more for a pre-owned vehicle, so it might be best to wait if you can.

At the same time, it’s still a great period to take advantage of “we buy cars” promotions if you have an extra vehicle taking up space. Dealers are still offering greater than normal prices to keep their inventories high.

Hopefully, things will be back to normal by the end of the year. You’ll go back to seeing a used car as a way to save money and having to negotiate for every penny regarding your trade-in. Until then, tread the market carefully.