As wholesale used car prices drop, dealers still selling at high prices

by Seth Udinski

Seth Udinski, FISM News

 

As the wholesale cost of used cars begins to decrease, buyers are still taking a huge hit to their wallets as the retail price for used vehicles remains high.

The wholesale cost for used cars has decreased by over 10% since last year, according to yesterday’s report from The Hill. Used luxury car prices have shrunk by over 13%, used SUVs have decreased by more than 12%, and used pickups have gone down by just over 8%.

Despite these decreases across the board, the retail sale price for used cars has jumped 7.2 percent over the past year. Because of this, many economists believe car dealers are to blame for continued car inflation by not passing along savings to consumers and instead padding their profits.

Others, however, feel that dealers have no choice but to charge high prices due to the supply-and-demand issues that are at the heart of inflation.

Mark Schirmer, director of public relations with Cox Automotive, said in an interview with The Hill,

We still think that with new vehicle inventory still low, we’re not expecting retail prices or wholesale prices to crash, but we certainly expect for them to come down some. We’re not expecting a huge correction. They’re going to stay historically elevated for a while.

Dean Baker, an economist at the Center for Economic Policy and Research, said,

If a dealer paid $5,000 for a car that today would sell for $4500 in the wholesale market, they probably will still look to get a price that compensates them for the $5000 they paid. That might mean there is a month or two for prices in the retail market to adjust to prices in the wholesale market … It is important to remember that we had a large shift of income shares from wages to profit in the pandemic. We can argue whether this was due to the exploitation of monopoly power or simply an outcome of shortages created by the pandemic and the war [in Ukraine], but the shift to profits is undeniable.

Author’s Biblical Analysis

At first glance, a biblical connection to a unique economic issue such as the auto market may seem unorthodox. With a deeper exploration, a vital issue to the Christian’s satisfaction and growth in Christ rises to the surface.

We must remember — Stuff is fleeting, but Christ will not fade.

Cars seem to be an on-the-nose picture of the mortality of stuff. It has often been said that all cars, even new ones, decrease in value almost immediately after the driver takes them off the lot after purchase. So many of us know all too well the “money pit” that many cars seem to be, as oil changes, inspection fees, insurance, gas, expected upkeep, unforeseen fixes, and accident repairs consistently hit our wallets, sometimes in devastating ways.

The lesson for us here is, we cannot put our hope for this life in stuff. Our physical treasures, no matter how nice they look or make us feel today, will someday end up in the trash heap. There is no arguing this fate.

The question Christians need to ask ourselves is this: Are we putting our hope in what we can see and touch and own, or are we putting in our God and Savior Jesus Christ who accomplished eternal life and union with God on our behalf?

Does this mean we forsake all “stuff” right now, knowing it will someday fade? We must use wisdom.

It would be foolish to say, for example, “I refuse to drive a car ever again, even though I need one to get to work and provide for my family.” Certainly, we must understand that we have temporal physical needs and that these things such as cars, clothing, and food are gifts from God that enable us to better serve Him and love those in our care.

It would also be foolish to say that God has intended all believers to live a life that is void of any enjoyment. In God’s act of creation, we see that God designed us in a way to enjoy the things he placed on this world. The problem arises when we don’t give God his proper place in our lives and try to find our fulfillment, our joy, and our value in things that are temporary.

When the “things of this world” hold a greater value than they should in our hearts then we will always be left unfulfilled since they will always wear out, break down, and lose their luster.

As believers, our value and fulfillment should instead simply be found in this:  You and I are sinners who deserve death and judgment, but God has graciously rescued us from the earth we deserve by sending His Son, the Lord Jesus, to stand in our place and pay the penalty we deserve, thereby making us sons and daughters of the King and giving us hope beyond the grave. Praise God!

So as you look around you and see painfully high prices for basic needs, as well as the finality of the physical things in your possession, keep your eyes fixed on the Pearl of Great Price, the Lord Jesus Christ, the only eternal treasure you and I could ever experience.

Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal;but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. For where your treasure is, there your heart will be also.  – Matthew 6:19-21

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