Is the Second Hand Car Market Booming – What top Car Appraisers have to say?
Is the Second Hand Car Market Booming in the United States? The manufacturing of new cars is low; hence most of the top dealers in the country have a handful of models in their den. As the numbers are low, they contribute to the rise of the nation’s overall inflation rate. Surprisingly, the average price of buying a new car in the US hit a record price of 38,255 Dollars in May, and in most cases, new car owners have paid prices that pass over the average price of buying a car in the US. Two-third of car owners paid more than 5% of the sticker price or the base price of a vehicle defined by the manufacturer.
According to a recent research report from JD power, wholesale prices have risen by 39% in the first quarter of the year. On the other hand, retail car prices are growing at the same 20% rate. As a result, wholesale prices are accelerating rapidly; hence used cars are attracting a lot of buyers across the nation.
The impact of a pandemic on the car industry
The US economic rebound prices are sky-high and are at their fastest rate in 13 years. Surprisingly, used car prices alone contributed an overall rise of 13% in May. Currently, the entire automobile market is witnessing a 180-degree revolution as the pandemic was responsible for the closure of several car dealerships. Employees working in automobile industries have lost their jobs, and the work from home pattern has also declined 30% in auto sales in the second quarter of 2020.
The market has slowly started an upward trend, with a sales rate increasing with a 10.06% increase in normal monthly sales compared to 2019.
Supply chain under distress:
Unfortunately, the demand is increasing when the automobile manufacturing industries all across the globe are either shut down or are not working at the desired potential. The supply rate is so low that North American automobile companies had only provided 3.4 million vehicles in the first three months of 2021. The numbers are expected to decline by the end of half a year.
Notable reasons for rising in car prices:
Limited Supply:
As mentioned above, limited supply from automobile manufacturers is one of the main reasons behind the rise of car prices across the globe. The used car and car rental companies are compensating the industry; hence people are diverted towards affordable options in the market. Undoubtedly, the limit of availability of new cars in the market is quite low because most of the car rental companies sold their old car fleets to get cash flow and survive during downtime. As people have started moving, car rental companies are running behind cars to boost their business.
One of the main reasons why most automobile industries are not manufacturing new models is that they have low storage; hence, they have to spend a lot on storage and maintenance of newly manufactured vehicles in the best condition. Ivan Drury, the senior manager of Edmunds.com, also added that rental companies buy 2 million vehicles every year, and they also sell their old vehicles at the same pace. He also added that the pandemic adversely affected the rental companies who sold vehicles to survive during tough times.
People are up and running:
Now that the COVID-19 vaccination is available and people are back at work, offices have reopened while the curbs have eased. However, most of the people are interested in having their own vehicle to avoid public transport hence it is the biggest reason behind the demand for cars.
Most of the employers are delighted as they are back on work after one year of work from home. At the same time, the majority of offices are scheduled to reopen in a few months. Some of the employees who didn’t take an interest in purchasing vehicles because of the fear of losing their job during the lockdown are now positively taking an interest in buying new cars. Some people are also migrating from public transport to private transport to reduce their exposure towards COVID-19 for peace of mind. On the other hand, people who used Uber for work are switching to personal vehicles to reduce the risk.
Well, the demand or popularity of a specific product among the consumers is one of the game-changing aspects which decide the upward or downward trend of a particular sector.
Work from home employees are eager to spend:
There is no doubt that most of the employees lost jobs during COVID-19, and those who had a constant income must be eager to spend their available cash in hand. Well, good or great news for most Americans is a recent business survey. Americans have 2.4 trillion Dollars in savings by the end of this year.
The government has also helped the nation by providing lots of compensation that has helped people to save lots of thousands. In addition, the lowered interest rates have also attracted most of the buyers to invest in vehicles that make their budget convenient to fit a new car.
Consumers are loving premium features:
As mentioned above, the lowered interest rates have attracted a lot of positive consumers, and they are likely to invest in premium quality vehicles like SUVs and trucks rather than buying cheap sedans. The demand for SUVs started rising before the pandemic, but it is reaching new heights post-pandemic. The manufacturers have also reduced the production of cheap cars to compensate for the demand of consumers to boost their sales and profits.
Used car dealers are benefitting because of less demand:
If you think that the rise in car prices will boost the profits of manufacturers, then you are wrong. The rise in prices will attract fewer consumers as most of the budget shoppers would prioritize models that are 1-2 years old. The used car dealers have enjoyed record profits in the first quarter of 2021.
Although the automobile manufacturers are not the biggest winners, they are still doing better in terms of profits when compared to the dreaded last year. A potential threat to the entire automobile industry is the rise in prices would discourage buyers as they would either postpone or go for used cars. A recent study from the University of Michigan also concluded that consumers are quite disturbed by the rise in prices of houses, vehicles, and other household products.
Will an increase in the interest of consumers in used cars benefit auto appraisers?
The car appraisal industry was overshadowed by the downfall of the automobile sector last year. But, interestingly, the increase in prices of new cars has come like a boon for car appraisal companies because most of the consumers are interested in used cars; hence they must get it approved by a certified appraisal for a safe trade.
If you are not aware of automobile appraisal, then they are the certified automobile experts who assess various physical conditions and prepare a detailed report about a used vehicle along with the trade-in value. Most the used car owners love to appraise their vehicle as it helps them in understanding the demand of their vehicle in the near future. At the same time, used car buyers appraise the vehicle for peace of mind.
Why is car appraisal important while trading used cars?
Undoubtedly, once the car is out of the showroom and on the road, its worth starts decreasing. The accidental repairs and poor maintenance also quickly devalue the vehicle. The appraisal certificate determines the worth of the vehicle after running thousands of miles on the road. Whether you are a seller or a buyer, an appraisal certificate is the best document to negotiate a fair trade from both ends. Buyers don’t have to pay more, whereas sellers don’t have to compromise with less.
What does a car appraisal do?
A professional car appraisal will evaluate your vehicle by assessing various factors like condition, make, model, mileage, interiors, tires, exteriors, windshields, and headlights while creating an appraisal. They also check maintenance records and pre-accidental history of the vehicle, which helps them in determining the true worth of the vehicle in the market. When you take your vehicle to an appraiser, you might have to hand over your key as they will take your car for a final test drive where they will check its comfort.
Are you looking for a trusted appraisal in the United States?
If you are looking for a trusted automobile appraisal in the United States, then Benchmark Auto Appraisers LLC is the leading appraiser. They appraise a diversity of vehicles like Muscle Cars, Semi-Trucks, RV, Motorhome, Motorcycle, and Classic Cars. They are also USPAP (Uniform Standards For Professional Appraisal Practice), and IACP (Independent Automobile Certified Professionals) certified, making them the best in the appraisal industry. So, if you are buying your first used car, then look no further than Benchmark Auto Appraisers LLC, which is an organization founded by Daniel Jendroski, who has 42 years of experience in the automotive industry. Book your free consultation right now at 1-877-888-6113.
Daniel “Dan” Jendrowski
Certified Public Auto Appraiser Diminish Value Experts B.C.A.A. & I.A.C.P.
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