Why Are Used Cars So Expensive?
Vehicles are not only modes of transportation; they are also financial investments. There’s a common saying that new cars lose a quarter of their value as soon as you drive them off the lot, and this saying is relatively accurate. Research indicates that the average car depreciates by 23.5% during the first year of ownership.
As a result, many people have been hesitant to shell out the money for a brand new car, knowing that, in all likelihood, the vehicle is going to lose a great deal of value within the first year or two of ownership. But with this line of thinking, why aren’t four or five-year-old cars going for half the price of this year’s model?
The short answer to this question is that it’s a combination of market forces and the Coronavirus. For further detail, let’s take a look at how we got here and why used cars are still so expensive.