Why Is Now the Best Time to Sell a Car
Have we reached a peak in used car prices? No one can say for sure, but there are definitely signs that the market is starting to cool down. With prices for some car models upmore than 30% over last year, this could be a good time to sell your car, especially if you don’t need it right now.
Why car prices can fall
Prices are already showing signs of stabilization, as they rose just 0.2% in July , compared with a 10.5% rise in June. A big factor behind the rise in prices was a shortage of semiconductor chips, which halted production of new cars. This, in turn, has led to an increase in demand for a limited stock of used cars, leading to higher prices.
While chip shortages are likely to be an ongoing problem until at least the end of 2021, some observers believe we are in the worst stage of scarcity and that prices will fall once supply catches up with demand. Last month, a Goldman Sachs analysis indicated that semiconductor chip production should gradually increase by the end of the year. This does not mean that prices will necessarily immediately return to pre-pandemic levels, but it is reasonable to assume that prices will eventually fall as new car production increases. In an interview with CNBC, Jeff Dyck, president of Sonic Automotive, claims it will cool the used car market:
New vehicle stocks will gradually improve over the next few months as we approach the end of the year. As it happens, it will reduce the number of inventory problems arising on the used side.
Wholesale prices have also declined, which means that dealerships are paying less for cars – another sign that the market is softening. Per David Paris from JD Power :
Wholesale prices look like they peaked eight weeks ago and have continued to decline ever since. Cars sold at dealerships today were purchased on average five to six weeks ago.
Is it worth selling a used car now?
No one knows for sure when the temporary shortage of semiconductor chips will end, but as the supply shortage diminishes, it is reasonable to assume that this will have a negative impact on prices, even if they only level out. And given the all-time highs in prices, anyway, now is a good time to sell a car.