If you were hoping to upgrade your wheels with that tax refund, think twice. Used car prices are soaring off the charts and into the stratosphere.
This spring has been raining higher prices for used cars as the market signals an unexpected reversal of last fall’s decline.
Manheim auctions saw a 4.3% uptick in February — the most significant jump since 2009 — and Black Book reported a 0.46 increase during one week alone in March — its highest increment since 2021!
“We’re unlikely to go back to pre-pandemic levels [for used car prices], said Chris Frey, senior industry insights manager at Cox Automotive. “Vehicles cost way more now. The landscape has changed. Automakers are not manufacturing as many as they have because they got the taste of gold — huge profits from not having so many vehicles in manufacturing.”
So, Why Buy Now? (If Used Car Prices Are High)
Because used car prices will only climb higher.
As long as there’s too much national debt the Federal Reserve must maintain low-interest rates or banks default on their loans. That means consumer borrowing costs remain low and the market for used cars stays highly competitive.
However, low-interest rates = higher inflation.
Inflation means you ain’t ever gonna buy a car for the price it used to cost. So, if you’re looking to turn that tax refund into wheels, now actually might be the time.
Demand Can’t Match Supply
Even during economic unease, the used-car market is experiencing an unexpected resurgence. Record sales in January and February suggest that despite tough times, shoppers may be turning to pre-owned options to save money.
It’s like that movie “Used Cars” where a used car dealer (played by Kurt Russell) is trying to sell cars but can’t because the demand has outstripped his supply.
Moreover, sales surged in February because winter temperatures were mild — potentially encouraging folks off their sofas into showrooms .
With inventory levels also low it seems wise strategy has been driving more people towards buying second-hand cars despite high used car prices; with models usually a few years old, and much cheaper than the latest releases.
Strategies to Beat the Used Car Prices Hike
The battle is on — the inflation’s winning and it looks like car prices are only heading higher. What can you do? This:
- Knowledge is power — do your homework. Research, research, and do more research on the car you’re interested in buying. CarFax and Kelley Blue Book are great tools to help you find out the real price of a car.
- Check online before you go shopping — Look out for special offers and discounts. Many dealers may be willing to give you a better deal online than in-store.
- Be ready to negotiate — You can almost always find room in the price of a pre-owned car. So don’t be afraid to haggle and ask for discounts.
- Look for trade-ins — If you’re looking to sell your old car, many dealers are willing to offer a trade-in. This could mean big savings on your new purchase. Also consider selling your car on Facebook Marketplace or Craigslist.
A Final Thought
It may seem counterintuitive — buying a car in the middle of an economic slump — but with used car prices already on the up, it’s better to strike now than wait any longer.
It’s crazy out there, but at least you know what to do. Good luck!
Happy car shopping! :)