Have you kicked the tires at an auto dealership lately? If you have, you might have experienced sticker shock, except this time, the shock comes from an unlikely source. The prices for used cars have skyrocketed since the beginning of 2021.
With soaring prices, auto dealers are paying more for trade-ins. In June alone, prices for used cars and trucks increased by 10.5 percent, which was the highest price increase for any consumer spending category in the United States. Moreover, the average price for pre-owned vehicles rose above $22,500 at the beginning of May.
The classic law of supply and demand has set the table for scorching hot used car prices. Now, the question is how long will the scorching hot used car prices last?
Why Sell Your Vehicle Now
The used and new car markets have a close relationship. Economic factors that impact one segment of the automotive industry tend to spill over into the other segment.
Welcome to 2021, where an incredible shortage of microchips has stalled growth for the new car market. Rapidly slowing automobile production around the world might make it a seller’s market. After all, fewer cars equal higher prices even if demand remains the same.
The extent of the microchip shortage was evident in June when a report came out stating the inventory for new cars declined by more than 50 percent. Lacking the supply to meet consumer demand, the new car market has lost customers to the used car market.
Many auto industry analysts predict the microchip shortage might last as long as two more years. However, that does not mean the current run on used cars will last as long.
How to Sell Your Vehicle
The bustling used car market has motivated tens of thousands of pre-owned vehicle owners to put their cars on the market. If you are considering listing your pre-owned car, the question for you to answer is how to sell your vehicle.
Step one involves calculating an approximate value for your used car, which means taking into account the brand, model, year, and mileage of the vehicle. Accessing the valuation tool at NADAGuides.com should help you calculate the value for your used car.
Fix Mechanical Issues
If you plan to sell your used vehicle to a private party, you will have to address every mechanical issue, even the minor ones. Private parties want a vehicle to be in mint condition before agreeing to a sale. Although the same principle typically applies to auto dealers, some dealerships have the technology and professional skillset to fix mechanical issues at a much lower cost than what it costs you to complete the same repair jobs.
Show You Care
One of the images that stick in the back of the minds of auto buyers is a large lemon. Potential buyers, from a neighbor down the street to the huge car dealership miles away, want reassurance that they are buying a motor vehicle that runs in pristine condition. One way to reassure potential buyers is to present the maintenance records of the vehicle.
Patience Is a Virtue
With the used car market still growing — although at a slower rate — sellers can take a more measured approach to selling their pre-owned vehicles. This means do not jump on the first offer made by an auto dealership.
In many cases, the offer you receive remains valid for a certain period. This gives you the opportunity to promote your used car to other car dealerships either as a direct sale or as a trade-in.
Leverage Digital Marketing
The internet has raised the automobile marketing game to another level. The key for you is to understand how to leverage the power of online marketing.
From online marketplaces to a one-page website, you have the digital power to get the word out about the used car that you have for sale. Images play an especially effective role in making your pre-owned vehicle stand out from the competition.
Verify Payment Method
Who you sell your used car to determines the type of payment you should accept. Accept only cash or a cashier’s check if you want to sell your pre-owned car to an individual. Never accept a personal check even if you know the buyer.
Selling your used car to a dealership increases the number of different payment options.
Which Used Vehicles are Selling More than New?
Because of economic factors such as the dramatic microchip shortage, used car sales have outpaced the sales of new motor vehicles. The interesting thing is some used car models are selling for more than their new vehicle counterparts.
According to the car search website iSeeCars.com, 10 used car models that currently sell for more than the same new car models are:
- Kia Rio: $17,346 new, $17,472 used
- Honda Civic: $26,331 new, $27,058 used
- Subaru WRX: $34,487 new, $34,568 used
- Honda Odyssey: $37,612 new, $38,048 used
- Toyota Tacoma: $37,902 new, $39,857 used
- Dodge Charger: $38,977 new, $39,874 used
- Dodge Challenger: $39,375 new, $40,764 used
- Hyundai Palisade: $44,063 new, $45,356 used
- GMC Sierra 1500: $54,205 new, $57,671 used
- Mercedes-Benz G-Class: $182,631 new, $190,078 used
The Bottom Line
Now is the time to act.
The scorching hot prices generated by used cars in June have slightly declined over the course of July. Nonetheless, the used car market remains a seller’s market. The question is how long will the bustling pre-owned car market last?
With the microchip shortage lasting for as long as two more years, the used car market should remain at least as vibrant as the new car market. However, economic factors can change the relationship between the two markets as soon as tomorrow.
If you have a pre-owned car that you want to sell, now is the time to take advantage of market dynamics that you might see again in your lifetime.