The economic slump accompanying the coronavirus shutdown has hurt just about every industry one way or another. But one industry that has somewhat benefited from the pandemic is the used-car market.
Cars, both old and new, are in high demand — so much so that prices are surging and inventory is becoming scarce. In September alone, the prices of used cars and trucks rose 6.7%, according to the Labor Department, marking the biggest monthly move since February 1969. The previous month, used car prices were up 5.4%. Compared to this time last year, overall prices for used cars are up by more than 10%.
This is not at all what experts expected. Edmunds, a car research site, said this shift is “unprecedented” since the value of goods (cars included) typically decreases during economic hardship. Used cars, however, have defied this trajectory and have instead gained ground every month of the pandemic.
There are plenty of reasons for this spike. Low interest rates make it more affordable to borrow to get a car. And used cars tend to be more available than new ones since many automakers were forced to shut down plants, leading to inventory shortages and delays.
But the demand for used cars also says something about the lifestyle changes people in the United States have had to make due to the coronavirus pandemic. More people are working from home, so individuals who may not have had a car before, or families who had only one vehicle, are realizing that independent transportation is necessary. You need more trips to the country if your neighborhood playground is locked up. People are still terrified of sitting in a crowded bus or metro car.
At the same time, there are fewer people unloading their cars. Some might not want to part with a reliable form of transportation due to the unpredictability of the past year, and others might not want to spend more money on a newer model due to the financial constraints many people are facing. The result has been a high demand but limited supply.
Suffice to say, it’s a seller’s market right now. And that fact alone should give the public hope that an economic recovery is underway, slowly but surely.
