If you’ve taken a look at the automotive market right now, then you know inventory is slim and prices are higher than ever. With many feeling the crunch of inflation in all aspects of their life, some have resulted in selling their used cars to help make some extra cash. Let’s take a look and see if you should sell your car.
Your used car is worth more than ever right now, but does that mean it’s time to let it go? Let’s take a look at how the pandemic and other economic factors have helped shape the automotive market these past couple of years. See why prices for used vehicles are higher than ever and find out when you can expect car prices to simmer down a bit.
Why Are Cars Expensive Right Now?
The great migration all across America with many young professionals and families leaving the city for suburban outskirts has helped fuel the increase in demand for vehicles. With this demand rising right alongside global covid outbreaks, the pandemic has created the perfect environment for a booming automotive market that consisted of high demand and not enough supply. But exactly why are cars so expensive right now and how has the pandemic helped fuel this rise in vehicle costs?
As lockdowns spread across the globe during the start of the pandemic, the pause in production stifled new inventory from entering global markets. As lockdowns began to lift, automakers continued to face hurdles including a lack of employees to run production, and a lack of materials to produce vehicles because of the impact of covid on other industries.
Global Semiconductor Shortages
The global semiconductor shortage has also greatly impacted the automotive industry. Today’s automobiles use semiconductor chips in virtually every part of their construction. From infotainment systems to safety systems like airbags and seatbelts tensioners, to brake systems, and everywhere in between, semiconductors are essential to building new vehicles.
Global lockdowns created a backlog in semiconductor manufacturing. Along with a rise in electronic goods that use semiconductor chips, demand for these valuable chips outweighed their supply as well. Automakers have struggled to get their hands on these electrical components and some makers have even had to redesign how they produce new vehicles. Some automakers have even gone as far as incorporating used components into their new vehicles like vintage dashboard gauges in order to limit the need for semiconductors.
Supply Chain Issues
Issues with the supply chain have also played a huge role in the high cost of today’s automotive market. It takes time to get a production facility up and running again after a lockdown. Once these factories were back in operation, there was still the issue of backlogs in shipping dates due to stalled cargo ships.
To further put a strain on supply chain issues, ports all across the nation had issues finding employees to help unload cargo ships and physically transport new vehicles to dealers.
How Expensive Are New Vehicles?
A combination of these issues which have largely been fueled by Covid has created the perfect storm for decreased access to new vehicles. The vehicles that are available not only take months longer to get delivered to customers but are also significantly more expensive too.
According to data compiled by Kelley Blue Book’s Cox Automotive, The price of a new car increased .07% month-over-month. In 2021, the price of a new vehicle averaged just over $40,000. In December, that number jumped to 47,000. Prices have simmered a little following the start of 2022, with a price of a new vehicle averaging about $46,404. Despite this, the price for a new vehicle is 12.5% more expensive than this time last year.
When Will New and Used Inventory Pick Up?
For those in the market for a new vehicle, the good news is that production has picked up and an infusion of new inventory is expected to come soon. Some analysts expect prices to continue ticking down with somewhat of a correction happening in late 2022, and early 2023.
Unsurprisingly, as inventory for new vehicles has been rather slim over the past year, more car buyers are looking at used cars as a way to get into a car that fits their budget and needs. As more new inventory hits the market, the used vehicle market will begin to see some relief too.
Should You Sell Your Car Right Now?
If you’re someone who’s thinking about selling your used vehicle, it’s still a great time to let go of your car. With more consumers shopping for pre-owned vehicles now more than ever, you’ll have the advantage of competition which means you can seek out a better deal than if you were selling your vehicle a year or two ago.
An important factor to consider is whether or not selling your vehicle will impact your day-to-day routine. For many workers, the pandemic meant a shift to remote working either on a hybrid schedule or permanently. If you have the advantage of working from home, then selling your used vehicle may be a decision worth entertaining.
It’s also important to consider how you will get around if you don’t have a vehicle on hand. If you live in an area where you have access to public transportation, this may be a route to consider. Other transportation alternatives include rideshare programs like Lyft and Uber. If you opt for this transportation method, you could potentially look at greater savings because you’ll no longer have to pay for gas or maintenance.
How Much Should You Sell Your Car For?
Using a car valuation tool like Kelley Blue Book can give you a fairly good estimate of your car’s current value. Factors like your vehicle’s condition, mileage, and even cosmetic status will impact the value of your vehicle. Luckily, in today’s automotive market, there is plenty of demand that can help drive the price of your car.
With the likely probability that the automotive market will begin to correct itself in the next year or so, there’s still plenty of time to make some good money when you sell your vehicle. For some, selling your used vehicle right now and then purchasing a new or pre-owned one in a year’s time might prove to be a good financial decision.
Final Thoughts: Should You Sell Your Car in Today’s Market?
If you’re debating selling your vehicle in the next month or so, you really have to look at your current lifestyle needs and whether or not you can afford to be without a vehicle right now.
If you have a secondary vehicle that you can do without, for the time being, it might be a good idea to sell your car. Considering your current circumstances, the value of your vehicle in the market you live in, and whether or not saying goodbye to your car will negatively impact your life are all important factors to consider.
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