Because of COVID, used car prices are still high in 2022

Because of COVID, used car prices are still high in 2022

The rise of used car prices during the pandemic is still due in 2022. As people turn to near-new purchases with the supply chain bottleneck due to months of waiting for new cars.

National motoring editor Joshua Dowling said: “The shortage of new cars available resulted in the price for used cars to increase. With buyers facing “not uncommon” delivery times of 3 to 6 months. The new car shortage, expected to last long and set to continue until 2022”. 

The reason for the increase in used car prices

Supply Chain: The global supply chain was affected when the pandemic outbreak started, making cars logistics shaky. The shortage of containers and the competition for cargo space has led to long delivery times.

Modern cars consist of many components. These modern cars rely on an intricate global dance. The parts of the car are being manufactured in one country and then shipped to another. This is the reason for shipment delay on new cars.

Due to supply chain issues, the used cars market is booming. This means it has become harder for people to navigate the market. Used cars are in higher demand than ever before. And people are turning to them more because they want to choose a car that is sustainable. 

Chip Shortage: carmakers are competing with each other for chips. The chip shortage means there is a lot of competition even with other industries for these components. Modern cars can have more than 1,000 chips for control of everything from mirrors to airbags and tyre pressure gauges.

When the pandemic first struck, cars companies cancelled orders they had placed for Chips. However, after the global economy bounced back more strongly than anticipated, car companies who waited to pick up their old orders found they were waiting at the back of the queue.

Chips are also in high demand for other industries like the medical industry and the computer industries.

Since the car companies are very good at keeping the prices they pay down, the Suppliers are now in turn making money from non-vehicle orders. 

In response to Covid and long delivery times, many people have turned to the used car market. With the demand for used cars outweighing the availability of them, the seller’s market has developed.

When will it end?

“That’s the important question, “When will it end?”  and It keeps getting pushed out,” says James Voortman, chief executive of the Australian Automotive Dealers Association.

“Some manufacturers said that they’re hopeful the shortage of chips will start to improve by the middle of this year 2022.”. As the global supply chain straighten out

What you should know before buying a used car

A new survey found that 20% of people who purchased a used car did not have a positive experience. Here is the reason why :

In spite of the average Australian spending 22 hours doing the research before buying a used car privately, 4 out of 5 people still experienced some level of confusion. In addition, many of those who purchased through a private seller had to pay additional costs. This additional payment includes necessary mechanical repairs after purchase or additional registration fees due to where you live.

A lot of Australians worry about a car’s warranty when buying a used car. Many others were also concerned that they had bought ‘a lemon’ and questioned if they were getting a good deal, or if the seller was trustworthy.

Many Australians also struggled with the technical aspects of inspecting cars and would rely on appearance or trust the seller’s word. In the assessment phase of buying a used car, many Australians missed key steps such as not organising a mechanical inspection or reviewing the car’s logbook. In addition to this, they didn’t check if the cars had been in any accidents before or had ‘repairable writeoff history’.

To help Australians navigate these complexities and more, German Precision offers a technical service to inspect your potential car prior to purchase. As part of the car inspection, we take pride in reporting minor/major damaged areas and signs of prior repairs. We can focus on details and make sure that each car is not considered a crashworthy one.

Sources 9news.com.au and allianz.com.au