Miami Car Credit: When Will Used Car Prices Go Down?
If you’ve watched car prices for the last few years, it probably seems like they have risen more than expected. Why is this happening, and what does it mean to those buying a used car? At present, the used automobile market is a bit unpredictable, due to conflicts overseas, supply chain recovery after the pandemic, and other factors. Let’s explore why car prices are up and then make a logical prediction on when used car prices are going back down. We’ll help you decide if it’s the right time to buy your next car in Miami or elsewhere.
Post-Pandemic Supply and Demand
Following the pandemic restrictions, Americans are starting to travel again. A sudden, renewed demand for automobiles comes at a time when supply is tight. This wouldn’t be much of a problem, but car production has stagnated as a result of COVID-19. Early in the epidemic, many manufacturing plants were forced to close as governments moved to control the virus, and the supply chain is still bouncing back to pre-pandemic conditions.
All products sold in a country inflate in price slightly, but normally at the same general rate as its money. Used cars are still at a record high after the pandemic, partly due to simply all cars being more expensive to produce right now. Most vehicles are created using a chain of manufacturing across multiple countries, all of which responded to the pandemic at different times and in different ways.
Computer Chip Shortage
Semiconductors, the chips used for computerized systems in modern cars, are particularly important to the supply chain. More and more systems in cars involve computers, so a shortage can limit how many cars a manufacturing plant can assemble. Computers are used in many other industries, as well, driving up the demand and price of the chips.
As a result, manufacturers have to charge higher prices to make up for the difference. Even if all the other components and materials are in place, a lack of computer chips will delay production. The chip shortage is expected to end within 2022 or 2023.
New Vehicle Designs
On top of more advanced systems in vehicles that require semiconductors, many vehicles are autonomous or powered by new, computerized electric or hybrid fuel systems. Safety features are often computerized, such as automatic braking and self-parking or even self-driving. Automakers are experimenting with new vehicle concepts as a way to come out of the market dip stronger, a rough situation during a computer chip shortage. Vehicles running on brand new technology usually are more expensive, before that technology gets normalized and optimized.
Invasion of Ukraine
The Russian invasion of Ukraine has affected the auto industry around the world. Namely for the United States, the conflict has led to a shortage in neon gas, another critical resource for computerized parts. Ukraine is also a leading supplier of wire harnesses and palladium, both important for automobile production. The invasion has led to shutdowns and businesses that can’t export or operate, or that can’t do business with Ukraine or Russia.
It’s common for people to be more careful with money during an international conflict like war, which doesn’t help the used car price situation. There’s no telling how the conflict will proceed over the coming years, though that also means that if news updates suggest an end to the war, that could be a time when used car sales go up and prices go down due to increased optimism about spending.
During a less stable global situation when war, pandemic shutdowns, or other events are going on, people are more likely to save their money and stick with any current car they have. The economy normally goes through peaks and valleys of people buying new things and holding onto their money, so there will still be periods every year where prices are better, like when dealers drop prices near the winter holidays.
Rental Car Company Expansion
More and more professionals travel to new places and need rental cars. The rise of rental car companies and their expansion to new types of vehicles and new forms of service mean that fewer cars are available for outright sale.
Car rental companies want to match this demand as much as possible. So, to keep their fleets up to date, several rental car companies have paid a premium for higher-quality and more recent pre-owned models. They’ve even expanded into rentable electric cars. Since another market is also buying up used cars, the limited supply can cause prices to rise.
When Will Used Car Prices Drop?
So, knowing the different factors that affect the car market, what’s the most reasonable prediction about a used car price drop? As the world continues to recover from any challenges, we predict used car prices will continue to lower until the middle of 2023, until they are close to pre-pandemic levels. In the meantime, though, you aren’t necessarily forced to wait. Even if the market is high in general, you can find an affordable pre-owned car in Miami more easily than finding as good of a deal on a new car.
Why You Should Still Buy Used Cars
Dealerships that sell new cars are paying for more expensive inventory, and the supply impacts affect new cars the most. It’s hard to get new car without paying well above market prices from a few years ago. When unscrupulous dealers tack on extra fees to make up for their losses, most Miami drivers are better off buying used. A trustworthy pre-owned dealership is enough to affordably own a great car, truck, or SUV.
You can rest assured that getting a used car doesn’t have to cost you too much. When prices in the market go a bit higher, your best move is to shop around a little more and ensure you’re picking the best dealer in your area. Miami Car Credit is eager to help folks get sensible financing on a comfortable vehicle with the latest safety features, highest tow ratings, or whatever matters most to you. Browse our pre-owned vehicle specials to see just how little your next dream car might cost.