A Used Car Market Crash Is Coming, Are You Prepared?

May 2nd, 2022 by

The pandemic brought many struggles to the used car market that have been going on for roughly three years, affecting the lives of consumers and manufacturers.

Luckily, things will soon be taking a turn for the better. Here’s what we have to say on the matter.

What Are These Struggles?

Ever since the pandemic first started, COVID-based restrictions have made it harder to develop and distribute semiconductor chips around the globe.

Since these chips are essential components for various tech-based products, many companies were struggling to make ends meet. Car manufacturers were among the affected.

The numbers for vehicle production lines started to decline, and it was rare for a car factory to meet its pre-pandemic prospects. And when things got piled up, it led to a shortage of new vehicles.

This meant that their selling prices had to respond by skyrocketing, following the law of supply and demand. Since not everyone could afford these prices, people turned to used cars for their driving needs.

Sadly, this only led to used car lots now facing shortages of their own. This, again, led to their prices skyrocketing as well.

Nowadays, the average price for a used car stands at around $28,000, about 42% more than it was in December 2019. Highly expensive.

What’s Different Today?

Recently, many chip manufacturers have shared their latest numbers, and we’re glad to say that they’re finally catching up to their pre-pandemic numbers. Some would even say that they’re on a path towards fulfilling the current demand.

In response, many auto manufacturers would start shifting their operations to account for the increase in their semiconductor chip stock.

In the best-case scenario, both car shortages could finally come to a close. Not only that, but this normalization process could result in a 30% drop in used car prices, according to KMPG.

How Can I Take Advantage of This?

Even if things are improving, everything will still take some time to settle in. That being said, there are three ways to tackle this situation when it comes to the consumer experience:

  • If you’re looking to buy, you might want to hold on for a while longer. Prices for used vehicles are still at an all-time high. However, these figures will sort themselves out later this year.
  • If you’re looking to sell, you might want to do it quickly. Assuming that you can find a buyer, you can still earn some extra profit due to the price inflation.
  • Finally, if you’re looking to sell and buy later, you might want to do both. Sell as quickly as possible, safeguard that money until the time’s right, then start looking for viable options by the end of the year.

House of Cars Wants What’s Best for You, Regardless of Any Shortage

This shortage did put a heavy strain on the market. But that never changed the fact that you might have been looking out for a car, nor did it change that you deserved it.

At House of Cars Lethbridge, we believe that everybody should drive out of the lot with their car of preference, and that mission has stood up strong to this very day.

With our excellent care and effort put into our car loan and auto dealer services, you can rest assured that you’ll always get the best deal possible. If you’re currently living in Lethbridge and looking for a used vehicle, you can’t go wrong with House of Cars.

Visit our website today to learn more!

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