What’s Behind the Recent Surge in the Used Car Market?

The used car market has been surging in recent years. Ever entwined with the fortunes of the new car market, certain seismic shifts in the production and availability of new cars have had significant knock-on effects when it comes to secondhand vehicles. If you are selling your used car in Sacramento or the Northern California area, this is best time to take advantage of the increased trade-in value that used cars are currently fetching. With links to a nationwide network of dealerships, companies such as Cash for Cars in Sacramento can even offer more than the trade-in value. The market has never been friendlier to sellers.
But why is this? Since April 2020, used car prices have surged an eyewatering 21%, meaning most cars are now worth considerably more than they were only a year ago. Given those timescales, you might expect Covid to have played a significant role in this phenomenon – and you would certainly be right. But the story is a little more complicated than that, and the reasons why the pandemic has had this effect are connected to a series of factors that go to the heart of the of fundamental link between the used and new car markets.
Setting the Rules of the Game
The basic theory of supply and demand is undoubtedly at work here. However, there has been no appreciable shift when it comes to the availability of used cars. There are, in fact, as many as ever. Rather, it is the new car industry that appears to be setting the rules of the game.
New car sales are actually up all across the U.S., but this is phenomenon that cannot be expected to continue indefinitely. The problem is that the auto-industry does not have a steady flow of new vehicles to meet this increased demand. We’ll get onto the reasons for that in a moment, but it’s important to understand that the fortunes of the used car industry are always enmeshed with those of the new. And if new cars are in short supply, then there is only one other industry that can fill that market void.
This is just one of the reasons why your used car can now expect to fetch a higher price. As lack of supply drives up new car prices, the number of people opting to buy a used car surges. This is of course as much good news for sellers as it is bad news for buyers.
The Pandemic
But why are there fewer new cars being manufactured? The blame, like so much else, can be laid at the door of coronavirus. Although we are more used to experiencing its depredations on the service sector, covid actually hit manufacturing pretty hard. With many factories closed for extended periods of time and then running on skeleton crews once reopened, there has not been a steady stream of new cars since before the outbreak.
A Volatile Situation
Like so many of the effects of the coronavirus pandemic, the current rosy situation for those wishing to sell their cars is not something that will remain static. For example, as prices rise and supply dwindles, certain cars may become much more valuable for trade-in. But by the same token, those selling a cars with the intention of upgrading might not do so anymore because the upgrading part has become more expensive.
Whatever way the situation may go, however, there is no denying that we are living through a little window in car market history that many sellers are looking to take advantage of.