Used cars alone accounted for one-third of all price inflation in the US over the past year. https://thehustle.co/why-are-used-cars-so-expensive-right-now/
Chip shortages are driving used and new car prices to historical levels. If you heard the stories of what consumers are paying for used cars you would be baffled. In some cases some used cars are selling for more than the same exact new car. The entire car Industry has never witnessed anything like this before. On average a new car depreciates about 10% once driven off the lot. They are now saying it's approximately 3%. They have no clue how long this will last. Some say for another year or 2 but it won't last forever. As you can see everything is bubbling, every market is out of whack due to the pandemic and the fed printing. Eventually there will be a gigantic collapse but for now don't be the fool who is going to over pay for a car and a house!!!
No supply, there are people going door to door leaving "I will buy this car"! notes on people's homes and cars. Used Car lots are hurting, we talked about this last year when discussing stocks like AN.
Indeed, less supply. The main reason is the transition to EV cars. In many countries consumers are in a lot of uncertainty about what will happen in the near future. ICE cars will be taxed more , access to big cities gets more and more prohibited. At the same time a lot of people don't like EV's because they have a limited range and that causes problems for people living in flats and cannot install a charger. Result is that a lot of people decide to continue to drive with the car they have instead of buying a new one as they did before. So the supply went down heavily and the availability of fresh second hand cars is now much lower resulting in higher prices. Sales of new cars went down too because of that.
It started early in the Covid shutdowns, I lived in a major metro area in California and I needed to pick up another "used" car as my wife totaled one of our vehicles. I turned to the usual online sources and was shocked at low selection/crazy prices. I called a friend who deals actively in used cars, he told me supply was drying up fast, with certain types of cars simply not available. Why ???, I asked . He said, extra stimulus $ handouts, people getting paid in various jobs to stay at home cutting costs and building up cash, etc. coupled with no where to spend the extra free money since everything was closed. People were picking up cars as projects, or a nice time to buy one for the kids one day, something to have with the free $ instead of extra toilet paper, backup vehicle, a million reasons. I soon began to run into folks buying extra cars. In addition our motor vehicle department was closed due to the pandemic. I ended up traveling to Hertz in Texas to get one of their BK liquidation cars. Salesmen told me he was selling a lot of cars to people traveling from California ( and some other areas ) to get them for same reason I did, no local supply , this was mid 2020.
its an age old technique, big auto companies wanted to suck all the existing ICE supply so that they can create artificial demand for EV's , might take 2-3 years to suck all the supply and then transition to EV. So dealers are part of the same game..
So - according to that graph, it is really worth it right now, if you have a 7-8 year old car, to sell it and buy a new one?