A lot of Americans use a motor vehicle daily to get wherever they need to go. I am fortunate to be currently borrowing my mom's Jeep to get to work and back. As of late, I have been looking at purchasing a vehicle of my own. In my search, I am considering vehicles that are not a truck nor a sedan. I am looking at crossovers and SUVs. This is a type of car that a majority of Americans are buying in the 2010s. Around 70% of new car sales in the US these days are trucks or SUVs. Most cars sold however are used cars, not new. In fact, in the last few years the used car volume is about double that of new cars and represents a market worth about 120 billion USD annually. In 2018, 41 million used cars were sold compared to 18 million new cars.
The 2008 global financial crisis had a severe impact on the US auto industry in terms of new vehicle sales. In 2008, the industry suffered an 18% decline in new car retail sales, followed by a 21% decline in 2009. This changed a lot about the auto industry in the US. Although the primary cause of the 2008 recession was issues in the financial industry, it had spillover effects across the economy.
Generally, most people buy a used car because they either do not want to spend the higher amount for a new car OR they simply cannot afford a new car. Additionally, some folks would like to use a vehicle until it has internally broken down to a point where buying new is the only option because this way of using a vehicle is both more environmentally friendly and more frugal. Most cars built today, treated with some compassion can drive for between 250,000 and 300,000 miles before a major component, such as the engine block or transmission, suffers from an issue which is so immensely costly to outright replace that another used car or buying new would be a better option.
Today amid the novel COVID-19 pandemic, used cars are flying off the
shelf parking lot. Many buyers are urban dwellers who have suddenly changed jobs in a despite need to make money. These new jobs which have come and gone during the pandemic induced economic shifts can often mean the new employee has to commute in a new fashion. And if this commuter does not want to take public transit, or if public transit is not available for this new job, only one option remains typically; a used car.
So how much have used cars jumped up in sales? Some places are at over 200% sales from last year alone. I walked by a used car lot in Somerville, MA, and found that the proprietor had recently purchased over $100,000 in new inventory (~ 20 cars at an average $5000). He shared this fact with me proudly. In a bad year, such as after the great recession, it may have taken him a full year to sell that inventory and make between $50,000 and $100,000 in profit. However, now they expect to sell these ~20 cars within the next few months and purchase a lot of fresh used cars soon after that. Where do these used cars come from? Well, obviously they come from new cars that were once owned. The original purchasers of new cars will typically sell them to a dealer in a trade, sell them to a used car dealer, or sell by themselves. The third option is usually the best moneymaker for the original owner but can involve a lot of time and effort so they cut their losses in time and energy and work with a dealer or used car salesperson.
By the time I finally figure out what sort of used car I would like to purchase, maybe cars will be obsolete? I feel like I'm the type of person to research this whole deal to oblivion so perhaps I'll cut my losses when the pandemic seller's market calms down and get a decent crossover vehicle. Who knows? Well you will if you keep reading this blog by then.