Used Car Shortage – What Happened?Jun 10th, 2021
Used car shortage is a scenario Finch Used Cars has heard a lot lately. Shortly after the COVID-19 pandemic hit, people realized they need to replace their vehicles. A lot were nervous about the health and safety risks of being exposed to the virus by interacting with private sellers. Our dealership websites got far more hits then we were used to since customers knew the Finch Auto Group took people's health and safety very seriously. Unfortunately, many were surprised to find out we didn’t have the very extensive selection we've come to be known for. And it's not just us, a sparse inventory has happened to everyone. Where did all the used cars go? Below we’ll describe what happening across the North America, and what it means for you as a used car shopper.
We are all very aware of how the pandemic has affected our lives and the economy, but those effects can be strangely confusing for the used car market. Many economist figured demand would decline as people would be afraid to go used car shopping, leading to an oversupply of vehicles that would prices to plummet. However, the exact opposite is what has happened in the many used car markets around the country. To understand what’s happening, you have to look at a variety of factors that affect the used car market:
Wholesale Auctions: Another major player in the used car supply chain are the wholesale auctions. A lot of other dealerships have to rely these auctions to beef up their inventory of vehicles. But the auctions shut down hard when the pandemic hit and have yet to come back to full operation. They are doing some business, but it’s online only and the volume is mere fraction of what it used to be. This is a huge reduction in the supply of used cars.
New Car Sales: All the economic uncertainty caused by the pandemic means fewer people are shelling out for brand new cars. This also means fewer cars are being traded in, which is a primary source of vehicles in the supply chain, and thus causing the used car shortage.
In terms of how this used car shortage impacts buyers, there's good and bad news. The bad is that economic theory is right about the effect of supply and demand on prices. The demand for used cars hasn’t gone down much, but the supply of used cars has plummeted. With the demand for vehicles being so much higher than the available of cars, this creates an issue similar to the housing crisis we have.
This doesn’t mean good deals are impossible to find though! We have them, it just means customers will have to be quick to put in offers, as most are going to be snatched up quickly. If you’re going to be shopping for a used car any time soon, when you find something you want at a reasonable price, you need to act fast! Do not procrastinate or it will be gone. Before COVID, the used car industry could be described as a buyer’s market. You could take your time to keep looking for a better deal on a better car. But the pandemic has turned the used car industry into a seller’s market, and that means you have to act fast to get what you want.
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The Bottom Line
Thankfully it looks like there's an end in sight to this pandemic, and you can trust that the team at Finch Auto Loans will be there at the front with the best deals for London. We’ve worked extremely hard to maintain a healthy inventory of quality used vehicles even with the drought. We still have our vehicles priced competitively with firm up-front prices, so you don't need to worry about haggling or negotiating. We also continue to offer our amazing 90-day Love it, or Bring it Back Guarantee. Don’t delay, act today, because the car you want won’t be here for long!
Plus, with the free vehicle pick-up and drop-off available at Finch locations across London, getting your vehicle serviced has never been this convenient.