If you’re like many Americans, you’re still working from home due to the COVID-19 pandemic. You’re barely getting in your vehicle, so if you’re looking for extra cash, you might be thinking, “This is a great time to sell my car.” There are some things you should know about the used car landscape, and car consumerism as a whole, before listing your vehicle.
The COVID-19 pandemic changed nearly everything about the way consumers interact with cars. For starters, people are driving less––much less. Between stay-at-home orders and many companies requiring employees who used to go into an office to work from home, there are fewer cars on the road. During the height of the pandemic, weekday traffic dropped by 30 percent, and weekend traffic dropped by 40 percent in the major metropolitan areas of San Francisco and Los Angeles––two cities notorious for their busy roads. One day, people who lived through this period will talk about the eerie days of going down the typically congested 405 freeway in LA to find it abandoned, like a ghost highway.
So, people weren’t (and in some cases still aren’t) driving cars in the pandemic. That also means people weren’t buying cars for a while. So dealerships stopped ordering as many cars, and manufacturers stopped making as many cars. The powers that be adjusted their processes to mirror consumer behavior. But then, something happened: all of that pent-up consumer spending came back with a vengeance. People wanted cars again, and the dealerships were not prepared to meet that need. Demand now far outweighs supply, manufacturers cannot spit out new cars at the rate at which people want them, and there’s a shortage of options. Everyone knows what that means: price increases.
You Have a Hot Commodity…For Now
This is where the good news comes in for anyone wanting to sell their used vehicle. Because shoppers just aren’t finding the new cars that they once did, they’re turning to used cars. Dealers are too eager to say, “Sorry, we just can’t cut you a deal––supplies are low. Everybody wants this car right now.” AutoNation CEO Mike Manley even stated that once car dealerships saw the fat profit they could turn by keeping supplies low and prices high, there may be no going back. So a used car could be the best option for anyone shopping for a vehicle for a while.
To give some idea of just how popular used cars became in the pandemic, know this: Carvana, which is one of the biggest used car retailers in the U.S., grew by 39 percent in 2020 and saw net sales of $4.7 billion. Similar used car retailers like Vroom saw booms as well. It also didn’t hurt that auto loan rates dropped, giving buyers further incentive to get out there and find a vehicle they love. And shoppers aren’t being picky about mileage, either. Forbes reported that the average used car with between 100,000 and 110,000 miles on it was selling for 31 percent more in 2021 compared to in 2020.
Other experts, however, say you could see prices go back down when supply chain issues clear up and dealerships can fill their lots again. Dealerships could be in for a game of chicken: they can only jack up prices due to “low supply” issues if they all agree to do that. Should one break the trend and bring in a large fleet of new cars offered at lower prices, they’ll ruin the cash grab for everybody. They will also make used cars look like less of a good deal by offering those good old discounts on new cars. It will be interesting to see how dealerships play their hand.
So, whether or not the high prices of used cars are here to stay remains heavily on how dealerships that sell new cars choose to behave. It also depends on whether car manufacturers will tolerate their dealers artificially keeping prices high. One thing is for certain: right now, you can make a good profit by selling your used car. It appears that people are getting back out there. They’re going on road trips. They’re going out to dinner. They want to resume normal life, and they need a way to get around. What they don’t want, while COVID-19 is still a threat, is to take public transit. Subways, buses, and even shared ride services pose too much of a threat to riders. People are eagerly shopping for used cars to have a safe and private way to commute.
How to Sell Your Used Car
Now that we know it’s a good time to sell your car, it’s important to consider your options. And there are many. You could always make a private party sale, which is likely the way to get the most cash. Just keep in mind that many buyers today have become accustomed to being able to take a car for a test drive. You’ll need to make sure that’s something you’re comfortable with. You’ll also likely be required to fully sanitize your car between test drives because of COVID-19. That can be time-consuming. The paperwork involved between the sale and the transfer of the title is also time-consuming and can be tricky while many government agencies remain closed or severely backed up.
If you want the smoothest experience, you can turn your car into a dealership. Let them buy the car off of you and handle everything from there, including the complicated paperwork, offering of test drives, and so on. It can be a relief, as the seller, to not worry about doing all of that correctly. You might not get as much money as you would through a private sale, but you’ll get less of a headache. A parallel option would be to list your vehicle on a platform like Cars.com. You’ll instantly get competing offers from multiple dealerships, giving you the shot at some extra cash.
There are also companies like Carvana and Vroom who will pick up your car at no charge to you. They’ll also give you instant offers so you get an early look at what you can get for your car before going through the trouble of meeting with a single person. No matter how you decide to sell your used car, do your research to know what it is worth. Kelley Blue Book, the National Automobile Dealers Association, and Edmunds are all good resources for determining your vehicle’s value.
For those curious as to which used vehicles are selling the most, it’s all about the large cars. SUVs and pickups are flying off of lots. The Ford F-150 was the most sold used car in 2021, followed by the Chevrolet Silverado 1500 and the Ram 1500. However, no matter the make and model of your used vehicle, you can go into this process confident that there will be buyers. New car prices are simply too high across the board.
The Future Is Unclear, So Sell Now
We can’t predict whether or not the prices of used cars will remain high. Manufacturer and dealership behavior will be a big indicator of that. After seeing what a high price tag they could put on their vehicles during times of low supply, these big players might not feel incentivized to ever go back to the way things were. That would mean good things for sellers of used cars. But even if the prices of new cars drop again, car shoppers now have a taste for the used car market. The pandemic prompted so many buyers to explore used cars for the first time and learn that there’s a lot to love there. They might favor used cars moving forward, regardless of new car availability. One thing is for certain: as of today, auto rates are low, new car supplies are low, and it’s a great time to sell your used car.