Why 2021 Used Cars Are Selling For So Much?

Supply and demand have always steered industry, and this is why 2021 used cars are selling for much more than they have in a long time.

Typically, you expect to find prices of pre-owned vehicles to be much lower than the price of new models. That doesn’t seem to be the case, and it’s causing challenges for customers looking to purchase a vehicle right now.

Numbers Don’t Lie for 2021 Used Cars.

Over the summer, used vehicles were typically sold at prices that were an average of 40 percent higher than what they were before the COVID-19 pandemic began. Cars that are much older, averaging nine years old, were as much as thirty percent higher, while vehicles that are only five years old saw average prices increase by more than $6,000 per vehicle. What is the cause of this absurd price hike in the used car market?

Putting it Simply for 2021 Used Cars

Used cars in 2021 are being sold at a much higher price than before the pandemic began, and this craziness is simply attributed to supply and demand. The demand for cars far outweighs the supply. Unfortunately, new cars aren’t available, which makes customers turn to the used car market for the vehicles they want to drive. Because the used vehicles are the only ones available, prices and interest rates have gone up exponentially.

Why Aren’t There Enough New Cars?

The reason for the shortage of new cars is something many people have discussed, and you’ve likely seen in the news. There aren’t enough microchips to go around. It seems that these semiconductor chips would be easy to get and use in vehicles, but several factors contributed to the shortage of these chips, which has crippled the new vehicle market and is making it impossible for new cars to be produced.

Where Are All the Microchips?

How can something as simple as a microchip contribute to a global vehicle shortage? Several factors went into the chip shortage, which in turn increased used cars for 2021 thus far. Think about what you use every day and how you use it. Do you use a computer at work, a cell phone in your pocket, drive a car, enjoy a gaming system, own a smart television, or another electronic device? All of these items use microchips.

Gaming Systems Take Over the 2021 Used Cars

As you might expect, the semiconductor chips used for the electronic systems in vehicles are more robust than those used for your smartphone and laptop. The same used to be true for gaming systems.

Unfortunately for the auto industry, when COVID-19 hit, both major gaming system manufacturers were preparing the release of new systems which required more robust microchips than before.

The global shutdown resulted in more orders for gaming systems that used the microchips that would have gone to the automotive industry.

Major Factory Problems

Even after the shutdown, when many people started going back to work, the auto industry was hit with another problem. Three of the largest factories that make semiconductor chips for the automotive world were shut down.

One was due to labor issues, but the other two experienced natural disasters with an earthquake that caused fires at one and freezing temperatures that caused the other to close. Thus, another delay was imminent for the automotive world.

Will this Madness Ever End?

The short answer to this question is, “yes.” Prices of used vehicles in 2021 have already begun to fall, which means we might have seen the highest prices of these models at the beginning of the summer. With prices already falling, it’s possible we will see the market normalize, especially after the supply of new vehicles is replenished once again.

What Should You Do?

If you’re thinking about buying one of the used cars offered at a local dealership and want to do so in 2021, you might want to wait a few more months if you can. Many experts are predicting the supply chain will level off and normalize before the end of the year.

This could bring the prices of used models back to where they belong. Waiting could be the best answer for you to find a great deal as well. Dealerships that have loaded up on used models will look to sell them before they can add more new models to the mix. Most dealers have a limited amount of space on their lots for the vehicles they want to sell.

Over the next several months, you might find deep discounts on used vehicles that will need to be sold to create more space for the new models that are finally being finished and shipped.