Is now the time to buy a used car?
2020 used car prices
Covid-19 has put a major crimp on new and used car sales which have people thinking that now may be the time to buy a used car. Now that states are opening up, does that mean now is the time to buy a used car? Maybe. On the negative side of the ledger, the wholesale used car prices are recovering from the steep slumps of March, April, and May of this year. But there’s a strong market driver that’s about to put pressure on that price rise; used cars and trucks are about to head to auction in large quantities from rental car companies (lack of personal and business travel), and high numbers of lease returns.
Should you buy a rental car?
They can be a good deal. See this post on buying a rental car
In addition to slow rentals and lots of lease returns, used car dealers are filling their lots will a high number of repossessions. Unlike rental cars and lease returns that are generally in good shape, repossessed vehicles are usually in terrible condition. The general rule is: If the owner can’t afford the loan payment, they also can’t afford to maintain the car. Avoid repossessed vehicles, even if the price is appealing.
Covid-19’s effect on consumer purchasing power will affect used car pricing
Government unemployment benefits during Covid-19 have helped many families stay afloat during the crisis. But staying afloat and having enough money to buy a new vehicle are two different things. Used car dealers are concerned about the credit-worthiness of used car buyers.
According to a recent article in Automotive News, a large number of rental cars, lease returns, and repossessions, combined with the current economic uncertainty may make used car sales very volatile during the summer of 2020. New car sales will be heavily subsidized by low-interest rates and rebates which may make new cars more affordable. That will help drive down used car prices since that cheap financing won’t be available for used cars.
Plus, millions of Americans are still out of work, and unemployment benefits put in place because of the pandemic are set to end in July.
Auction sales rates are up
During the worst of the stay-at-home period in the first two weeks of March, auctions sold only 15% of their inventory. By May 18th, sales rose to 49%. Wholesale prices in April 2020 were down by 13% compared to project values.
Wholesale used car prices rose 16% over a seven-week period ending June 7th.
According to industry experts, summer 2020 will be a buyers market for used cars and trucks. If you have good credit and a decent downpayment, you’ll be in the negotiating driver’s seat.
©, 2020 Rick Muscoplat
Posted on by Rick Muscoplat