Karley Cicale, FISM News
One thing that never changes is the need for transportation. Usually the smartest economic choice is to buy a used car rather than a brand new one right off the lot. But, that logic has recently been turned on its head.
If you’re in the market right now, it might actually be cheaper to buy a new car. A recent study from the automotive research site iSeeCars.com identified 16 new vehicles that were cheaper than their slightly used counterparts, some of which cost thousands more to buy.
There are two main contributing factors. FISM news has reported periodic updates about how the microchip shortage has affected various supply chains, including motor vehicles. This shortage, along with pandemic factors like shut down plants, have contributed to a diminished supply of cars that manufacturers still haven’t caught up with.
The second factor is that used car sales have always outperformed new car sales. Data from 2015 data showed that 17.5 million new vehicles were sold, versus about 37 million used vehicles. With the current financial uncertainty, people are more likely to hang onto their cars, which diminishes the supply chain for used car dealers. The demand for used vehicles, however, is still high. In fact, it may be greater than before as many people, especially young, low income buyers, wouldn’t consider buying a new car as they come out of the pandemic. Even with the desire to avoid a purchase, car leases continue their cycle of expiration and renewal, leaving many drivers with the decision of whether to continue a lease or make a purchase.
In early November, the average lightly used car cost nearly 11% less than its new counterpart, but in June that gap closed to just 3%. The average used car is now nearly 30 percent more expensive than it was before last year’s lockdowns .
For example, the Kia Telluride’s MSRP is $44,000 new on average , and currently, the average price for a used version is $47,000 – a difference of 8.1%, or around $3,000.
Though this can appear like a paradoxical no-win situation, what comes up will always come down. There is an expected dip toward the end of the year, when many cars will reach their one year mark, and value inevitably diminishes. Until then, this trend may be the perfect opportunity to make a sale of your old vehicle.