Shopping for a used car or truck has never felt more daunting. Prices are at record highs, no matter what make or model you might be seeking. Why are used trucks so expensive across the board?
Pandemic-related shortages hit auto manufacturing harder than most industries. With fewer new cars, more people are buying used. Trucks retain value longer than cars, so used trucks are consistently more expensive.
Production is down, and many auto plants remain closed from the COVID-19 pandemic. To stay profitable, car companies are raising prices on the small number of vehicles they can produce. This problem isn’t going away, either. Many car shoppers held off on buying in 2020 and 2021, only to find that new car prices are up 13% from this time last year.
Trucks, in particular, have become the new luxury vehicles. Many trucks made and sold today are large, costly models with premium add-ons, so affordable used trucks are even harder to come by.
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Why Are Used Vehicles So Expensive Right Now?
The low inventory numbers and high prices on new cars have driven many shoppers to buy used instead. Since more people are considering used vehicles, sellers can charge more and still find a buyer. According to Edmunds projections, the average used car in America will soon cost more than $30,000.
Simply put, used vehicles are expensive because new cars are even more expensive.
Why are used cars so expensive right now? Ultimately, it all comes down to issues in the production line.
The Global Computer Chip Shortage Is Ongoing
Millions of products rely on semiconductors (commonly referred to as computer chips) to run their internal computers. The first chip shortages were due to factories closing amid the COVID-19 pandemic, but in 2022, there still aren’t enough computer chips to meet global demand.
Budget cars have dozens of computer systems that all require these chips, and a single luxury car can require more than a hundred chips. Forbes reports that millions of vehicles won’t be manufactured this year due to shortages.
Supply Chain Delays Are Affecting Automakers
Semiconductors aren’t the only components that are difficult to obtain right now. Continuing COVID-19 lockdowns in China have shut down factories that manufacture smaller car parts, and the war in Ukraine has slowed shipping and burdened international ports.
The global supply chain is in a precarious state, and modern cars require materials from all over the world.
Labor and Production Costs Are at All-Time Highs
Even if an automaker can source the materials they need, gas prices make shipping those materials to the factory more expensive than ever. Labor is at a premium, too, as inflation has dramatically increased the cost of living in the United States. Workers are reluctant to take jobs that won’t pay their ever-rising bills.
Demand Outpacing Supply
Those problems all play a role in why used cars are so expensive right now: basic supply and demand. Options for car buyers are limited, creating a seller’s market. This means that anyone selling can ask for higher prices, confident that someone will need a car enough to pay.
If buyers stop purchasing these costly vehicles, will used car prices drop in 2022? Possibly, but it will only be a slight dip if there’s still a shortage of cars on the market. Prices will return to normal when manufacturing bounces back, rebalancing supply and demand.
How To Save When Shopping for a Truck
Now that you know why used trucks are so expensive right now, here are some ways to spend less on a car or truck in this tough market.
Keep an Open Mind
It’s essential to be flexible about what you’re looking for in a truck. Expanding your search and considering less popular makes, models and colors will increase your odds of finding an affordable option.
If you’ve always bought used, now may be the time to consider buying new. Ordering directly from the manufacturer may enable you to choose an option within your budget. You’ll also be able to bypass the luxury add-ons dealerships are using to raise prices.
Strike While the Iron Is Hot
Don’t wait to capitalize if you see a listing for a used truck at a reasonable price point. There are still occasional deals on used trucks, but they’re often swept up fast.
If you have an old car to get rid of, now is definitely the time to sell or trade-in. Be careful that the dealership doesn’t short-change you on your trade-in. Check used car lots and listings to ensure you’re getting what your car is worth in this market.
Explore Different Financing Options
High prices may mean you have to take out an auto loan, so do plenty of research to be sure you’re getting a good deal. Be sure to consider the length of the loan and how many payments you’ll have to make in total, rather than focusing on just the monthly payment. Check your local credit unions, as some offer lower interest rates than banks and dealerships.
Car loan interest rates have fluctuated in the past year, rising slightly from 2021 into 2022. However, any savings from last year’s slight drop in interest rates were offset by the high prices of the cars themselves.
When Will Used Vehicle Prices Begin To Drop?
Even the experts aren’t sure. Early projections for increased auto manufacturing in 2022 were overly optimistic. According to Bloomberg News and the Biden administration, the computer chip shortage is expected to continue well into next year.
It’s unlikely that used car prices will drop significantly in 2022 since auto manufacturing requires so many of these valuable devices.
The good news is that the industry will recover in time. Kelly Blue Book predicts that once manufacturing resumes in earnest, used vehicles will become more affordable.
With prices rising on nearly everything, it’s frustrating that used trucks are so expensive. If you need a truck within the year, consider ordering a new economy truck with no frills or pouncing on any rare deals you come across. Waiting is still a viable option, but don’t count on used car prices dropping in 2022.
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