It will surprise exactly zero of our readers that prices of second-hand vehicles are through the roof. A constricted new car supply which leads to a dearth of trade-ins has contributed to customers facing the prospect of paying exorbitant sums for previously loved vehicles. Now, a new stat from Edmunds.com puts a precise number on the issue.
Last week, Mexican President Andrés Manuel López Obrador made a pledge to legalize millions of vehicles being illegally imported from the United States. While it sounds like a phenomenal way to help the nation to contend with product shortages that are driving up vehicle prices around the globe, all of the cars had been smuggled previously and many were presumed to have been stolen.
This has created a lot of tension. Despite there being evidence that these vehicles frequently end up becoming workhorses for criminal cartels, illegally imported beaters also provide a cheap alternative to poorer residents right when automotive prices (new and used) have started to disconnect from reality. Times are tough and destitute families aren’t going to care where a car comes from when it’s the only one they can afford. So López Obrador has officially launched a new regularization program designed to bring these automobiles into the fold.
While nobody needs to tell you that the economy isn’t in good health, we should at least hip you to the latest automotive trends relating to the financial purgatory we’re currently living through. Ford sent a memo to dealers last week indicating that it would be removing the minimum FICO requirement for 84-month financing, indicating that the industry may soon normalize auto loans that are even longer than the 72-month whoppers that have grown in popularity over the last several years.
Meanwhile, those needing a vehicle intermittently will find that rental rates have not been declining as hoped. Despite analysts previously suggesting that auto pricing may stabilize through the fall, we now look to be going into the holidays facing familiar high-priced troubles — and there’s really no reason to think that’s going to change after 2022 gets here.
With automakers having a difficult time keeping production schedules thanks to COVID restrictions nuking demand and upending supply chains, 2021 arrived with plenty of problems. Desperate to replenish fleets they had sold off while everyone was locked indoors, rental agencies went on a used car buying spree. But it wasn’t just rental fleets that needed to be restocked, dealerships are also finding themselves with fewer models on the lot than they’re accustomed to — which is a bad position to be in when surveys have revealed consumers are now willing to pay stupidly high prices for automobiles.
They’re reportedly going to great lengths to acquire used cars as the great buyup of 2021 continues.
We’ve been covering the staggering increase of automobile pricing all year, starting with the second-hand surge created by rental industries sucking up used models to replace all the vehicles they dumped during the pandemic. A year of suppressed demand and prolonged restrictions absolutely crippled supply chains and placed the automotive sector in an extremely difficult position going into 2021. We wish we could say things were improving but the most heartening news we’ve come across was the possibility that select manufacturers might soon have a line on semiconductor chips — hopefully encouraging new vehicle production.
But the used market is still heading into uncharted waters. According to data collected by CarGurus, the typical price for a used automobile increased by about 30 percent against this time last year. Though more worrying is how much of that spike is consolidated within the last 90 days.
April’s fastest-selling used vehicles were led by the BMW 2 Series, according to iSeeCars. The 20 fastest-selling used vehicles averaged 28.7 days, 1.2-1.7 times faster than it took to sell an ordinary used vehicle. The fastest-selling used vehicles included a mix of sports cars, luxury vehicles, hybrids, and minivans.
With rental companies coming off a particularly lean 2020, fleet downsizing turned out to be a necessity for many agencies. Unfortunately, demand for rental vehicles has begun to return and some markets have found themselves operating with an insufficient number of cars. The upside to this is the ability to charge exorbitant fees for models nobody wanted to rent in the first place. But businesses can’t cash in on vehicles that didn’t get rented, leaving agencies desperate for new product that’s been backlogged by the auto industry’s semiconductor shortage.
The solution is a novel one, at least for rental companies. Rather than gamble the business on whether or not supply chains normalize before summer, they’ve been prowling auctions and hoovering up used cars in record numbers.
At this point, only two things in our present reality bear any similarity to what took place in the Great Before: average new car transaction prices are shooting for the Van Allen Belt, and pickups sell like hotcakes. The relationship between 1 and 2 can’t be downplayed.
Everything else has been turned upside down by the coronavirus pandemic and the resulting plunge in sales spurred by both fear and state lockdown measures. Domestic market share is up, zero-interest loans are proliferating, and used vehicle prices are falling through the floor.
That latter issue could spell big losses for manufacturers whose main business is selling new vehicles.
Until subscription services irreparably modify what constitutes “owning” a car, resale value will continue being an important consideration when shopping for a new vehicle. Every dollar you can squeeze out of your vehicle down the road is one you don’t have to hand over at the dealership.
Every year, Kelly Blue Book compiles a list of models occupying the top spots of the resale value charts, and, every year, we’ve watched as passenger cars are gradually replaced by pickups, crossovers, and SUVs. Last year, the Subaru WRX was the only sedan to break into the top 10. However, this year’s KBB list is entirely devoid of cars.
We’ve discussed the issues facing used vehicle buyers a fair bit in the recent past, but September data shows the market’s quickly rising prices did not cool off with the arrival of autumn. Wholesale used vehicle prices continued to climb, with the Manheim Used Vehicle Value Index reaching its highest point in history.
Breaking down the numbers, it appears used car shoppers with the least amount of money to spend are seeing the greatest increases in price. It’s a cruel world out there.
There aren’t too many vehicles that can really heat up the bile in your stomach like a botched custom. The Plymouth Prowler isn’t for everyone and the Mustang II is an acquired taste, but neither elicit the negative response of a customized El Camino donk riding on 27-inch wheels with a Dora the Explorer paint job.
However, donk culture includes a community of enthusiasts who love their vehicles dearly. Some people see a malaise-era classic cruising on wagon wheels and representing their favorite candy, soft drink, or television show and think it’s glorious. Loads of donks and hi-risers are tastefully executed each year. You can make a case for almost any custom, no matter how heinous it is to your own sensibilities.
There are, of course, exceptions, and the Caravan Pickup custom abomination seen above is assuredly one of those. I was getting coffee when news of this abomination reached me. My phone vibrated to indicate I had received a text message from a friend who shares a mutual interest in cars. “Dude, you’ve got to see this thing,” it read. “But I hope you’re sitting down.”
Nothing lasts forever, as Axl Rose once said. After flatlining for a couple of years, during which time car owners — on average — saw no increases in repair costs stemming from “check engine” lights, bills are headed back up.
A study looking at average repair costs in 2016 has found that the price of discovering the cause of that dreaded light rose 2.7 percent between last year and 2015. That brings the average repair bill for this type of garage visit to $398. However, not every region of America took a hit.
All that leg-stretching, snot-nosed kid-hauling, hockey equipment-carrying, ATV-lugging space that new vehicle buyers so desperately crave comes at a premium.
Thanks to this insatiable thirst for crossovers, SUVs, and pickups, the average new vehicle transaction price jumped to a new record in 2016. Good news for manufacturers, but also for those selling their old ride.
Used vehicles with open recalls have begun rolling off AutoNation lots again, 16 months after the country’s largest new vehicle retailer promised an end to the practice.
The retailer, which has a half-billion dollar used vehicle expansion plan in the works, blames the about-face on the incoming Trump administration, with its CEO declaring that the legislative fight for mandatory used car recall repair is dead in the water.
Modern vehicles are, for the most part, a treasure trove of technology designed to keep your sorry butt out of the emergency room, but not every driver enjoys such luxuries.
The average vehicle on the road is 11 or 12 years old, hailing from a time when backup cameras needed to be hand held, side airbags were a new and rare option, and five-star safety ratings weren’t easy to come by — especially in the types of vehicles you see in a Walmart parking lot.
Well, we now have a list of the most dangerous average-age vehicles on the road. Expect to lose some sleep if you’re unlucky enough to have one of these rides sitting in your driveway.
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- InCogKneeToe 2 Words ok 4 from the article “a collision-free society”. There are just billions too many variables for it to ever be possible.Just a couple of weeks ago, a Deer ran into my vehicle, I was stopped at the time, what can "Sensing" do for that? Unless the Deer get Sensors too.And Society as a Whole has suffered from this belief. The belief that Someone or Something should Think for Me, I shouldn't have to. Common Sense is getting rarer and rarer every second the World Spins.
- Sgeffe I’ve got no problems with the HondaSensing kit in my one-generation-wonder 2019 Accord Touring 2.0T. (Although, ironically, the telematics unit won’t receive incoming commands from stuff like the mobile app allowing for remote start and the like. First world problems; working with Honda on a resolution.)Unlike most people who probably aren’t aware of their vehicle’s owner’s manual, however, I don’t expect the technology to be anything more than an ASSIST! The car will watch the distance to the car in front, but if needed, I’m still hovering my foot over the brake if necessary. Even if the BSM light in the mirror isn’t on, I still glance over my shoulder. Et cetera.
- THX1136 Thanks for the explanation, Jeff! Appreciate you taking the time.
- ScarecrowRepair Stick-what? Maybe it needs a laxative.
- FreedMike ...but is the monthly turn signal subscription also going up?