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Why is the price of used cars so high: NPR



On September 24, in the CarMax store in Colmar, California, used cars were parked on the sales floor. After used car prices steadily climbed (surprisingly several months), CarMax reported a surge in earnings.

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On September 24, in the CarMax store in Colmar, California, used cars were parked on the sales floor. After used car prices steadily climbed (surprisingly several months), CarMax reported a surge in earnings.

Justin Sullivan/Getty Images

Aaron Springer of Odenton, Maryland does not want to sell his 2014 He bought the Volkswagen Jetta SportWagen a few years ago.

He said: “I like this car.”

But Springer heard that the used car market is very hot, so he decided that he should check it out himself. To his surprise, the used car website Carvana offered him an offer that was $1,500 higher than his 2018 purchase price.

“I mean, it’s too expensive to be Do not Sell ​​it. “He said.

Add the value of used cars to the list of things that will turn upside down in 2020. Springer’s experience is excellent, but it also marks the development of the times: throughout the summer, the prices of used cars, trucks and SUVs have risen significantly because demand far exceeds supply.

According to data from Cox Automotive, as of September, the wholesale value of used cars has increased by 15% from last year. The current average price on CarGurus is $22,470, which is $1,800 higher than the beginning of 2020.

The growth rate seems to have stabilized, but the price is still very high.

Ivan Drury, senior director of insights at Edmunds, a car information company, said: “Anyone who tracks them…will be shocked. Almost terrified.”

Like Springer, Drewry felt the benefits firsthand. Last year, he bought two cars and sold two more a few months ago.

He broke even in one car and made money from another car, which Trulli called “excellent to say the least.”

This spring, when the coronavirus pandemic began to spread, the auto factory temporarily closed the factory for safety reasons. This has caused a shortage of new car stocks, and more people have entered the used car market.

At the same time, many people are looking for cars. Part of this is due to concerns about the safety of carpooling or taking public transportation (although the transportation system is taking steps to improve safety).

As buyers use their coronavirus rescue inspections for new cars, demand is also stimulated by policy.

Orby Galarza, a used car salesman in Harrisonburg, Virginia, said: “People can spend more money,” he sees a direct connection between relief inspections and sales.

In short, the pandemic has reduced the supply of cars and at the same time increased the demand for cars. It was Econ 101, and the result was a price increase. And upward. And upward.

This is a huge boost for those who have cars in good condition to sell or trade. Some drivers invest more money in new, more expensive cars.

If the lease is about to end, the driver of the leased vehicle can also benefit from these increased prices. The purchase price determined based on the estimated value at the beginning of the lease may now be a few thousand dollars less than the actual value of the vehicle.

This means that the driver can buy out the rental car, then turn around in exchange for the vehicle or sell it for cash, and then immediately make a substantial profit.

But for buyers looking for affordable used cars, high prices are bad news, and shortages of inventory can cause frustration.

This is another sign of how the pandemic and economic turmoil it caused have impacted the rich and the rich in different ways.

Some drivers are trapped in older, less reliable vehicles, they are driving underground, waiting for the market to calm down so that they can afford to buy alternatives. Others have no choice.

Danielle Jennings of Baltimore needs a new car this summer after the 17-year-old car finally gave up on the ghost. But she searched the used car market for reliable vehicles within the price range, but she had no luck.

She said: “I just want to be able to go to work and be able to take care of my family.” “My back is against the wall.”

Jennings breathed a sigh of relief and finally obtained the 2013 Chrysler 200 through a non-profit organization called “Vehicles for Money”, which sold donated cars to people in need of transportation at a discount.

The “Big Change Car” said that due to the pandemic, demand has increased, but because the program requires participants to find work, many applicants have also been disqualified.

Vehicle affordability is not a new issue. Even if car prices fall rather than rise, many low-income Americans will still struggle with transportation costs.

However, the astonishing price spike certainly cannot help potential car buyers with tight budgets. Before prices return to normal, there are few opportunities for bargaining.


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