In the United States, inflation drives up the price of used cars

Due to the shortage of electronic chips, new cars are scarce. Individuals who resell their cars are doing good business.

Sell ​​your used car at the same price, or even more expensive despite higher mileage? This is the unprecedented consequence of soaring prices in the United States. “It’s a totally new trend” which is not about to stop, says Aurelien Guillaud, owner of Arlington Auto Group (AAG), a car dealership based in Arlington, Virginia. “My car was sleeping in my apartment garage, so it was in good shape. But, it shocked me to see that its price was higher than that of four years ago “, tells AFP Masaki Kondo, an expatriate Japanese journalist who sold his Chevrolet a few months ago to the same dealer in Gaithersburg (Maryland), 62,000 dollars, or 2,000 dollars more than the purchase.

Consumer prices soared in 2021 in the United States, + 7%, unheard of for nearly 40 years, fueled by the even more dizzying rise in used cars and trucks (+ 37.3%) . Since the pandemic, automakers have struggled to get their hands on some parts, especially computer chips imported from Asia, slowing production of new vehicles. With the shortage of new cars, there has been an influx of demands for used cars, says the Arlington dealership. Car rental companies, unable to acquire new vehicles, have stopped quickly disposing of their old cars, draining the used vehicle market and pushing up prices further.

Hence an attractive offer for Masaki Kondo’s Chevrolet. By buying it back from him, the Gaithersburg dealer told him that he would have no trouble reselling it for $ 74,000 given the demand. “If we compare to a year ago, we buy the same car for 20,000 dollars instead of 16,000 dollars and we sell it for 24,000”, explains Eddy Malikov, manager of AAG. Outside, in the parking lot, around 40 cars are waiting for their new owner, not bad considering the situation. And business should continue to turn as recent strict lockdowns in China to contain the Omicron variant exacerbate the chip shortage, pushing the influx of new cars to a more distant horizon.

A collapse in sight

In the United States, the appetite for used vehicles can also be explained by the fact that Americans are increasingly reluctant to take public transport due to the never-ending pandemic. “Elsewhere in Europe, people go to buy a scooter or a motorbike. Here, it’s the car because of the distances to be covered ”, observes Aurelien Guillaud. Suddenly, prices go up. “We have a customer who bought his car for $ 21,000 in 2019, who sold it for $ 21,000 two years later with 10,000 miles (16,093 km) Moreover”, says Eddy Malikov. So that inspires some. “I look on the forums, (…) and there are people who admit buying a car to resell it in two weeks”, “it’s a way for people to make money”, notes Aurélien Guillaud. But he warns against this practice because in Virginia, individuals are allowed to buy and resell at most 5 cars per year.

In a recent study, the firm KPMG points out that the boom in the used car market will likely be followed by a collapse. “History teaches us that the current frenzy of the second-hand market will eventually stop”, write the authors, pointing out that chip shortages and supply chain problems will subside. “The powerful industrial machine will come back at full speed and the car parks of the dealers will once again be full”, they say. So the market goes “Collapse”, they add, predicting a drop of 30% from its level today. They recognize, however, that it is difficult to know when this could happen and if the decline could be. “Steep or slow”.

A sign that manufacturers seem to be banking on a boom that will last a while yet, General Motors announced on Tuesday its intention to launch CarBravo, a new online used vehicle market for GM brand vehicles, to compete with dealers. online such as Carvana and CarMax.


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