Following the outbreak of Covid-19 that impacted negatively on the global economy resulting in uncontrollable surging inflation, car owners are now selling their used cars 10 percent higher than they bought them.
This is contrary to the belief that a car loses its value as it graces the road. The automotive research firm Black Book found out that cars are now holding on to about 10 percent more of their value after three years than they were during the pandemic.
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“Everybody was expecting a big drop, a shatter, an explosion, and values to drop when supply came back. Didn’t happen,” Shane Sutherland, who owns the used car dealership Northport Motors, told CBS New York. According to Sutherland “We are constantly selling vehicles with 80-100,000 miles that are providing excellent value for customers.”
According to data from S&P Global Mobility, the average age of a passenger vehicle is up three months compared to last year — now on the road for a record 12.5 years — and it’s common to see some people driving cars 20 years or older.
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“Your used car is worth that much more at trade-in or to sell it on the open market. But it’s a bad thing for people that need to buy a new car right now,” said Paul Oster, CEO of Better Qualified. Meanwhile, experts say it has to do with inflation.
“The costs of goods in all services have gone up, so that’s kind of maintained or even increased the values of these new cars,” Oster said.
Industry professionals say that for certain consumers, now may be a good time to buy a certified pre-owned vehicle. Or in other cases, buy out your car at the end of your lease.
“If you’re in a situation where the current value of your car is higher than that residual contract value amount, it’s pretty straightforward. You should buy out that lease,” said Matt Dundas, senior director of finance at Carvana. Dundas said you can then sell it and make a profit.
