June 12

Used Car Market Sales Rocket Post-Pandemic


Last Updated on September 23, 2022

The used car market looked very attractive in the year 2021. In fact, so attractive that used car market sales rocketed post-pandemic. As used car sales soared, new car sales slowed. The shortages in new car manufacturing were driving up prices for new cars, though selection and availability were down. 

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When the pandemic took ahold of America in early 2020, many people altered the way they were living and working. There were those who began working from home, some permanently. Government-issued orders to stay home led others to decrease travel to school or even visiting family and friends. This meant that patrons of public transportation or rideshare services like Uber were scare or absent. People ceased going out to restaurants, community events, and sporting venues. 

For a time many were not using their cars, or using them less. Thus, the need for a new car diminished.

The smallest things can be the biggest problems

Car manufacturers cut production in 2020 to be in line with the decreased sales expectation for the near future. As a result, this decreased the amount of microchip orders. Yes, new car technology without microchips is next to nonexistent.

On the other hand, microchip manufacturers grew their sales. They sold products to manufacturers of laptops, iPads, and other entertainment devices. These sales exploded in response to people working and studying from home. 

Then the demand for new cars returned. 

Not a buyers’ market

Not everything is returning to pre-pandemic standards. Working remotely has become normalized by the pandemic and almost everyone is accustomed to online meetings. Some jobs no longer require employees to be in-person five days a week. Other segments of the workforce are moving out of expensive urban areas and purchasing properties in less costly municipalities. These municipalities don’t have the same public transportation opportunities, so these people were looking for (mostly new) cars.

And they weren’t the only ones.

Many saved a ton during the pandemic by staying at home. They saved on gas, travel expenses, not dining out, and not visiting entertainment venues like movies. After a holding pattern of about a year, people readied to make some investments and quality of life changes. That included purchasing a new vehicle. 

So, both the “return to normal” and the “new normal” put a higher demand on new car sales. That left car manufacturers to play catch up in their production.

Sales for the first five months of 2020 for the top three car manufacturers (Ford, Honda, and Toyota) were 2.36 million. Sales for the first five months of 2021 were 1.8 million. This represents a sales decrease of 24 percent. And since the demand for new car prices was high, new car prices increased.

No deals at the dealer

Car dealerships know there is a high demand for their new car sales, but limited supply. Both their new and used inventories are smaller. As the dealerships sell less new cars, they are purchasing less used cars (as trade-ins). 

The lack of new cars for sales has increased demand for low-mileage, good quality used cars. So used cars are seeing the same limited supply and increased demand as new car sales and used car prices went up by more than 20 percent prior to 2021.  

Needless to say, they weren’t negotiating great deals to get you behind the wheel. 

Car transportation services are scarce

Usage of rideshare and taxi services also seriously decreased during most of 2020. Taxi companies and car rental companies reduced fleets and cut or reduced purchase intentions for 2020 and 2021. Uber and Lyft have seen a decrease in their labor force since the pandemic as people could not or chose not to participate in rideshare services. 

As people became vaccinated, travel restrictions lifted, businesses reopened, and employees got back to the office, the need for rental cars and similar services dramatically increased. Though this happened while fleet numbers and the number of ride share drivers is still down.

People visiting business and tourist destinations, such as Las Vegas, have to find car rentals much earlier in advance than previously, and are choosing an unwanted type or size of vehicle because options are limited. People relying on ride shares waited longer for rides and had to upgrade to premium options to get to their destinations faster. 

The best car-buying option 

Used Car Market Infographic - Best Used Large SUVs

You’re likely asking yourself an important question. There are limited supplies and higher-than-normal prices on new and used cars, combined with inadequate car rental, taxi, and rideshare services. And if there wasn’t enough uncertainty in the market, the continued supply chain crisis, inflation, and astronomically high gas prices have made the market worse.

If this is the case, where can someone buy a good vehicle?

Auctions have always provided a low-cost opportunity to acquire goods, and used vehicles are no exception.

People can come away from auctions with vehicles they claim was a “steal” – sometimes paying half of the retail value. Taxi companies, car rental companies, and government agencies divest of their retired vehicles at auctions, and those tend to be well-maintained and good options. Used vehicle dealers frequent them to find cars they can turnaround quickly for a good margin. Auctions can be the perfect place to get a used vehicle for you too.

There are some who are reasonably cautious of auctions. These sales can easily become a haven for the stolen, the totaled, and the unknown. For these reasons, some consider auctions to be too unpredictable and if you don’t know what you’re doing, they can be. However, for the knowledgeable and experienced auction hunter, auctions provide a treasure of opportunities.

And we can’t forget the benefit of finding a car through an online auction beats the inconvenience of being in-person at a dealer or a live auction. Their inventory is smaller and thus may not have what you need.

Buying cars at auction

Here are tips on how to buy a used vehicle at auction while minimizing risk.

  1. Find viable auction options. You need to research different auction opportunities. Not all auctions work the same. Find out the rules (and potential costs) for registering, bidding and buying at the auction companies you consider. Online auctions can provide a lot more options than what is available at auctions located close to you. 
  2. Research your ideal vehicle options. When auctions release the list of items for sale, review it ahead of the auction. Online auction companies often have continual auctions versus in-person auctions. Identify vehicles that are of interest to you. Find out the retail price of the vehicles according to car books. Carefully read the auction’s information about any vehicles of interest. 
  3. Get in the right head space. Auctions can get competitive. There is visible competition for the items on which you bid. Set your spending limits and risk thresholds, then stick to them. Observe how the bidding works before making any bids yourself. 
  4. Thoroughly inspect the vehicle. Don’t just accept what you read about the vehicle. Check the VIN (vehicle identification number) on the dash and the door to make sure they are the same and then use it to verify the car’s history. If you don’t know cars well, bring someone with you who does. If you can, turn on the engine and check the vehicle’s ability to function. 

The year of 2020 was unprecedented for everyone, and 2021 was a trial and error run to rediscover normalcy. Having the right car, new or old, is essential for driving affordably and in style. Find the best used vehicles near you at Municibid, an online government auction marketplace.


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