The inflation problem is getting severely out of hand. While this is a problem for everyday items like fuel and food, it’s an even bigger problem for the automotive market. These items are pretty expensive, to begin with, so the recent price increases have really made it harder to afford your own vehicle. Some of the reasons for this inflation trend are well-known and some of them are not so well-known. As such, we would like to go over five of the main reasons why used cars are becoming more expensive.
1. Computer Chip Shortages Due To COVID
You may be wondering why are used cars so expensive right now? One reason is due to a computer chip shortage. Humanity’s reliance on computers has certain consequences, and not all of them are good. New cars require computer chips that are made of very specific materials. These chips, called microcontrollers, are mostly manufactured in China: The very country in which COVID originated. This is how the coronavirus ended up affecting the price of new cars.
When people cannot afford new cars, they only have one other option: A used car. When so many more people are looking for a good used car, that increases the total demand, which in turn increases the prices.
2. Fuel Issues Due To The War In Ukraine
As most of us already know, fuel costs are rising at a ridiculous rate. If you think you are spending a lot of money on gas, just imagine how much money a car manufacturer spends on fuel! Once manufactured, these machines have to be tested and shipped, and that requires gas. And so, when fuel costs go through the roof, manufacturers will usually pass that expense to the customers. Because Russia was formerly one of the world’s biggest oil exporters, the sanctions resulting from the war in Ukraine have squeezed the gas market terribly.
3. Increased Labor And Production Costs
This one is also an unfortunate consequence of the pandemic. It seems like most of the inflation issues in the world today can either be traced to COVID-19 or the Ukraine war. A lot of people were put out of work by the pandemic, whether temporarily or long-term. Because the government was shelling out money in the form of economic relief checks, and because there was a national moratorium on evictions, a lot of people chose not to work. This led to higher wages for those who were still willing to work. Consequently, this leads to higher labor costs, and that adds to the total cost of the car.
4. Lack Of Discretion
For many years, it has been relatively easy to find a decent used car. Sure, it might have a few minor issues, but those can be fixed. Thus, people can be forgiven if they have taken this availability for granted. Up until recently, hunting for a good deal on a used car was much easier.
Unfortunately, times have changed. We can hope for change, as the chip shortage might be easing off, but we still have to adapt in the meantime. You might consider the use of an auto broker like this one that specializes in helping people find good deals on used cars.
Finally, some of the problems can be attributed to simple old-fashioned greed. There are plenty of unscrupulous used car dealers out there. In fact, it is quite common for people to joke about used car salesmen when talking about shady business practices. We aren’t saying that all of them are crooked, of course, or even the majority. However, those kinds of people do exist, and they are primarily motivated by a desire for large profits. So, what happens when a person like that sees car prices rising? The answer to that question is obvious: They will take advantage of the situation to gouge buyers for as much as possible.
We would say that these are the five main reasons why used cars are becoming more expensive. These price increases have been highly significant, so this is not a very good time to buy a car. Still, if you really need one, there may be no choice.
If you must buy a car in the current market, we would recommend being very careful and shopping around for the best possible deal. Private sellers are often a cheaper deal than used car lots, but there will be virtually no guarantees with such a private deal. So, if you choose to go with a private seller, make sure the car is in relatively good shape before you lay down a single dollar. No matter what you choose to do, we hope that this advice has given you what you needed.
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