The demand for used cars has soared during the Covid-19 pandemic for numerous reasons. Historically, consumers gravitate to used vehicles during times of economic uncertainty because they are cheaper and allow consumers to purchase without being tied into monthly payments.
Covid-19 has presented many unique challenges for auto manufacturers, dealerships, and consumers alike that have created a "perfect storm" in the used car market. As demand has spiked, dealerships have also seen their new inventory slashed as manufacturing plants across the globe ceased operations during lockdowns. Consulting firm AlixPartners estimates a drop in sales of 36 million new vehicles globally through 2022 and forecasts U.S. new car sales to be down by 3.5 million year over year. Additionally, as more consumers shy away from mass transportation options, this has also contributed to increased demand for used vehicles.
So how do you find the most dependable used vehicle for your money? Much of what makes a used vehicle "good" hasn't changed, even though we are living through extraordinary times. Finding the right used vehicle will take some introspection and an understanding of your used vehicle needs.
First, you should understand your budgetary constraints. Are you looking for a vehicle you can purchase outright or are you comfortable with financing? Although many are wary of financing during economic uncertainty, with historically low interest rates and incentives, consumers would do well to keep an open mind. If financing is an option, what would you like your monthly payment to be and how much can you afford to put down on the vehicle? As with anything, the more money you’re able to spend, the higher the overall quality of the used vehicle you purchase will be. Developing an understanding of your specific financial needs will help you zero in on a budget for your used vehicle.
Second, you should understand the value of the vehicles you're considering. According to a 2019 article from Business Insider, new cars lose 10% of their retail value in the first month and additional 20% in the first year. By year 3, a vehicle may have lost as much as 50% of its original value. Many consumers begin their used vehicle search with models that are at least 3 years old. This not only ensures that the steepest depreciation in value has already occurred, but the terms of most leases are 3 years, meaning there are many previously leased vehicles available in this age range. Leased vehicles are attractive because, due to terms and conditions, they typically have low mileage and buyers can be confident they have been well maintained by the previous owner in order to stay within the lease terms.
The value of a used vehicle derives from a range of factors including but not limited to mileage, make and model, type of vehicle, condition, and the options included. There are plenty of online resources that will generate a suggested price for a vehicle based on these factors, the most well-known being Kelley Blue Book. It's important to note that prices may fluctuate based on where you're located as well. For example, if you live in rural, sparsely paved areas, off-road capable pickups and SUV's may be more expensive as a result.
If reliability and dependability are your most important priority, Kelley Blue Book says 4-door sedans are your best bet. 4-door sedans usually come with decent features, mid-range fuel economy, and great safety ratings. Additionally, as they’re some of the most common vehicles on the road, most repair shops can service them and affordable parts are easily available. Some of their top-rated used makes and models are the Hyundai Sonata, Kia Rio, Toyota Corolla, Volkswagen Jetta, and Ford Focus Electric.
Lastly, always remember that your AAA Approved Auto Repair facility or trusted mechanic will inspect any vehicle you’re considering purchasing and any used car seller should be comfortable with you taking the vehicle for an inspection. Our qualified mechanics will be happy to fully inspect the vehicle for you so that you can be sure no hidden issues catch you by surprise.
