The pandemic and now the Ukraine war has significantly impacted the auto market. With the potential for prices to increase drastically and leave no room for relief, many car enthusiasts ask a very important question…
“Is now the time to buy, sell, or trade in my car?”
Today, we’ll take a closer look at that question. We’ll evaluate market trends for selling, buying, or trading cars and assess potential future developments.
A shortage of computer chips has limited vehicle production worldwide. This means that used car prices are up, too. Last year, used car prices averaged around $30,000, $6,800 higher than last year’s average.
Today the situation is even worse, with models such as Kio Rio costing as much as $17,772, which is a 51.4% ($6,035) change. Although you might be able to knock a bit off the price when working with a private seller, they will still insist on charging you a considerable premium, even for a used model.
Considering that about 40% of US households buy a car every year, it’s easy to see how this supply-demand mismatch can become a serious problem.
There is a silver lining, though. Automakers expect the supply of microchips and other car parts to improve this year. That could help with inventories and ease the price situation. It could eventually lead to buyers paying less than the sticker price, which is not the case right now.
On the whole, the market is in an uncertain place as far as buyers are concerned, though we expect things to improve in the months to come.
On the other hand, car sellers are in a much better position. Shortages of crucial car parts have made industry giants such as General Motors cut production or, in some cases, build vehicles without certain features. Supply isn’t keeping up with demand for cars, allowing car sellers to jack up the prices and profit.
Despite sales being poor in 2021, sellers and experts believe prices will continue to rise throughout 2022. This is evident today as used car prices have increased by 35% in February. For instance, the selling price for models like Hyundai Sonata Hybrid, Chevrolet Spark, or Nissan LEAF has risen by a remarkable 50-60%, meaning you’re in a great position to sell right now.
If you are still keen on getting a car, trading in your current vehicle is great. If you have a popular car model that’s no more than six or seven years old and in good condition, you could save considerably on your purchase by trading in your vehicle.
If you are financially able to buy a car in today’s market – new or used – make sure to get the best price possible on your trade-in. Before accepting a trade-in offer, you need to inspect your car, note its condition, and research trade-in value online for similar models.
Some cars like the 2015 Mitsubishi Outlander retain their value and can even be sold for a higher price today than in the past. Try as many dealers as possible to get a clear picture of your car’s trade-in value.
In today’s environment, buying a car will put a significant dent in your wallet. With the prices rapidly climbing up and a shortage of models with all features, the best thing to do would be to hold on for a few months, reassess the market, then make a purchase decision. If you need a car right now, the best way forward is to trade in your existing vehicle to get the best possible deal on your new purchase.
On the flip side, this is a great time to sell your car if that’s what you’re looking to do. Demand remains high, and shortages of critical parts, especially electronics, will likely continue for several more months. If you sell now, you’ll get a great deal and mitigate the risk of prices falling in the months to come.
Leasing is another option to consider. While car leases are also pricey in today’s market, this might be a more viable short to medium-term option. Check with your local dealers, consider options, and identify what works best for you.
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