The Pandemic Used-Car Boom Is Coming to an Abrupt End

[dalton99a]

https://www.nytimes.com/2023/01/30/business/economy/used-cars-carmax-carvana.html
https://archive.ph/rZXjH

The Pandemic Used-Car Boom Is Coming to an Abrupt End
Dealerships are seeing sales and prices drop as consumers tighten their belts, putting financial pressure on companies like Carvana that grew fast in recent years.
By Neal E. Boudette
Jan. 30, 2023, 9:43 a.m. ET

About a year ago, the used-car business was a rollicking party. The coronavirus pandemic and a global semiconductor shortage forced automakers to stop or slow production of new cars and trucks, pushing consumers to used-car lots. Prices for pre-owned vehicles surged.

Now, the used-car business is suffering a brutal hangover. Americans, especially people on tight budgets, are buying fewer cars as interest rates rise and fears of a recession grow. And improved auto production has eased the shortage of new vehicles.

As a result, sales and prices of used cars are falling and the auto dealers that specialize in them are hurting.

“After a huge run up in 2021, last year was a reality check,” Chris Frey, senior manager of economic and industry insights at Cox Automotive, a market research firm. “The used market now faces a challenging year as demand weakens.”

According to Cox, used-car values fell 14 percent in 2022 and are expected to fall more than 4 percent this year. That shift means many dealers may have no choice but to sell some vehicles for less than they paid.

...

[MichMan]

1. Lots of consumers are going to find themselves upside down as well

[dalton99a]

2. Yep.

[Johnny2X2X]

3. Good news overall

This was a component of inflation that was out of control for a couple years.

[lindysalsagal]

4. Yer breaking my heart here. Not.

Don't get me started on car dealerships.

[Hassin Bin Sober]

5. We could have sold, for a profit, a plug in hybrid we own

My partner wanted to sell it and get another full electric.

I hesitated and the crazy offers evaporated in a period of a week. It was obviously the top of the bubble.

I’ll never hear the end of it. Lol.

[JustABozoOnThisBus]

7. If a long road trip should pop up in your future plans, ...

... you and yours might appreciate a plug-in hybrid. In the middle of nowhere, a working, available, charging station might be hard to find. Gas stations are everywhere, mostly.

[Deep State Witch]

9. We sold our hybrid Sonata

About a year ago for $20K. Which was half of what we paid for it. It had high mileage, but was in great condition. We're down to one car now, although we're considering getting an e-bike for my husband if he goes back to work in an office.

[MineralMan]

6. I needed a car at the end of 2021. Used car prices were horribly high.

The only thing that made sense was to buy a new car that I could find in a dealer's inventory.

So that's what I did. Bought a 2021 Chevy Trax, the cheapest AWD compact SUV on the market. I had to buy it before it even got to the dealership, while it was still in transit. New cars were scarce and the local Chevy dealer was willing to lock one in for me that was already on the way there. Soon after that, you couldn't find that model anywhere on any new car lot.

Scary stuff.

[Disaffected]

8. It's about time.

Used car prices here in many instances are equal or greater than the original vehicle MSRP.

[Mr.Bill]

10. I had some luck (and good timing) on a deal. It was June of 2021.

I had a leased car that had three months left on the lease. I wanted to buy it because it only had 14K miles on it. The residual on the lease was $9,500 and I would also have to make those last three payments totaling $900. I also would have to pay sales tax of 8.5% on that $9,500. Still a good deal, I thought. The general manager met me when I arrived and the first words out of his mouth were "I'll give you $15,000 for your car and make the last three payments for you. The only condition was I had to buy a new car in stock. I found the new version of my car on the lot with more options on it than mine. It was a Nissan Sentra and the MSRP was $23,000.

This new car, with tax and license would be about $25,000 out the door. With the cash the manager gave me applied to the purchase, it went out the door at $20,000. I was happy, and the dealer was, too. He sold my used lease car for $19,000 (above original MSRP) and on paper, he got MSRP for the new one I bought. Strange but good deal for both parties, and one that will never happen again, which is okay because at age 69, I'm hoping this will be the last car I buy. Kelly Blue Book today shows the value of my new car nearly two years later at around the original MSRP.