You Would Be Crazy to Buy a Used Car Right Now

Tim Healey
by Tim Healey

I touched on it in the newsier post about used-car prices down below, but in normal times, scribes like us sometimes advise our family and friends who are car shopping to buy used, because a lightly used car can be in like-new condition and cost significantly less. And someone else has taken the initial huge depreciation hit.

These are not normal times.

If someone came to me right now and said they wanted to buy a car, I’d advise them to wait. Let inventories recover from the supply tightness caused by the semiconductor chip shortage. And if they were unable or unwilling to wait, I’d tell them to consider buying new. Especially, of course, if they wanted any of the 16 models that are averaging higher prices used than new that we discussed earlier today.

*To be clear, we’re talking mostly about mainstream metal used for daily driving. This discussion doesn’t apply to classic and/or collector’s cars, used cars more than a few years old, or late-model cars that are desired by enthusiasts (especially hard-to-find ones). Those types of vehicles aren’t part of this discussion for obvious reasons.

And if my hypothetical acquaintance insisted on buying used, I’d tell them they’re crazy (unless, of course, they couldn’t wait to get a car). Even if the car they’re targeting is generally cheaper used.

It’s not just about the cost of new versus used. The constricted supply of new cars is driving the price of used cars up, even if that price doesn’t cross the threshold of what a new car stickers for. Simply put, used cars cost more than they normally would due to temporary market conditions.

Analysts say that the market should return to normal within the next year or so, as the pandemic (hopefully) continues to recede, the chip shortage eases, and other production problems get solved. The number of new-car sales could get back to 16 or 17 million units per year again — that’s where it was not just before COVID, but also way back in the day before the Great Recession hits.

One doesn’t need to be an economist to understand that if that forecast holds true, there will be plenty of new cars that soon become used cars. Thus increasing supply. Not only that, but those who have older cars might finally buy new ones, further increasing supply. Yes, it’s true that older used cars can’t be directly compared to ones that are under three or five years old — the older ones will have more wear, higher mileages, they’ll be more outdated in terms of features, they’ll be out of factory warranty, they will be too old to be certified pre-owned, yadda yadda yadda — but since not every used-car buyer is looking for something of recent vintage, the increased supply could still drag down prices across the board.

Look, we all love new cars around here. Many of us also love slightly used cars. But right now seems like a terrible time to buy.

The good news is that the market should improve, from the buyer’s perspective, soon enough. Patience, in this case, is likely to be rewarded.

[Image: Mikbiz/Shutterstock.com]

Tim Healey
Tim Healey

Tim Healey grew up around the auto-parts business and has always had a love for cars — his parents joke his first word was “‘Vette”. Despite this, he wanted to pursue a career in sports writing but he ended up falling semi-accidentally into the automotive-journalism industry, first at Consumer Guide Automotive and later at Web2Carz.com. He also worked as an industry analyst at Mintel Group and freelanced for About.com, CarFax, Vehix.com, High Gear Media, Torque News, FutureCar.com, Cars.com, among others, and of course Vertical Scope sites such as AutoGuide.com, Off-Road.com, and HybridCars.com. He’s an urbanite and as such, doesn’t need a daily driver, but if he had one, it would be compact, sporty, and have a manual transmission.

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  • 28-Cars-Later 28-Cars-Later on Jul 12, 2021

    The start of Q4 would put things a little over a year since this "shortage" started, if by mid Q4 there are not signs the "shortage" has been abated expect it to continue through all of 2022 because it is being made to happen deliberately.

  • Ayliniemi Ayliniemi on Jul 31, 2021

    Yeah been looking at this Ford Ranger with under 10 miles on it getting dusty on the lot. $40,xxx We looked at it about 2 weeks ago. Not exactly flying off the lot? Sales man sent us a picture of it in the E-mail. I'm wondering when these dealers are going to crack. Did you hear about that Mirage they marked up 6k? LOL

  • B-BodyBuick84 Mitsubishi Pajero Sport of course, a 7 seater, 2.4 turbo-diesel I4 BOF SUV with Super-Select 4WD, centre and rear locking diffs standard of course.
  • Corey Lewis Think how dated this 80s design was by 1995!
  • Tassos Jong-iL Communist America Rises!
  • Merc190 A CB7 Accord with the 5 cylinder
  • MRF 95 T-Bird Daihatsu Copen- A fun Kei sized roadster. Equipped with a 660cc three, a five speed manual and a retractable roof it’s all you need. Subaru Levorg wagon-because not everyone needs a lifted Outback.
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