COVID has remade the landscape like an earthquake. The government-mandated shutdowns have forced kids to take classes online while many of their parents tried to work remotely. We've seen shortages, shutdowns, business failures and a surge in online buying. But there are things like cars you don't want to buy sight unseen, though the process itself has changed. Here are a few ways how COVID has changed the way used cars are sold.
Used Cars May Cost More than New
For the first time in recent history, some used cars cost more than new cars. A number of desirable used cars one to three years old now cost more than they sold for 12 to 24 months prior. This is because new car production stalled due to the government-mandated shutdowns. This resulted in new car model releases being delayed by up to a year. And new car production has been hampered by disruptions to the supply chain. The biggest constraint has been the shortage of computer chips used in vehicles. This means that people who want to buy a new car may not be able to get it, so they're competing for the limited inventory of used cars instead.
The supply of used cars is constrained, too. Most used cars come onto the market because someone gets rid of their old car after buying a new one. The government-mandated shutdowns forced many to delay upgrading to a new car. Others are bidding up used cars because they can't afford to buy a new one.
All of this explains why you'll pay more for used cars for sale than you would have a year ago, even if the car itself is a year older. (The average price went up 11% last year.) And it explains why there is less selection on used car lots in general.
More Car Sales Occur Entirely Online
Online buying exploded during the COVID era, and that trend is expected to continue for the foreseeable future. A number of websites that let you buy a car online without seeing it until it has delivered have seen double digit growth. These sites have far more pictures and even 3D models of the car for you to peruse. They tend to do more thorough vehicle inspections and have good warranties to alleviate buyer concerns.
Car dealerships have also invested in online car sales in order to sell cars to those afraid to step on the lot or continue selling cars despite social distancing guidelines. This means that you can find more detailed online listings from car lots. They have more photos and in-depth reporting on the vehicle's condition. Used car dealers have been slower to offer at-home test drives and curbside test drives. They've been more willing to deliver cars to people who bought it online, as long as the payment went through.
More of the Process Has Moved Online
One industry survey found that seventy percent of car buyers would never buy a car online. And industry studies show that the percentage of people buying cars entirely online hasn't changed during COVID. Instead, more of the process has moved online. We already mentioned at-home test drives that were booked online becoming one way to get people to test drive and ideally buy a car. However, dealerships have moved more process steps online. For example, a number of websites integrate vehicle research, securing financing and connecting to a local dealership that sells the car you want. This eliminates the need to visit half a dozen dealerships or spend an hour in the car dealership office financing the purchase. All you have to do as a customer is schedule the test drive, drive it and decide whether or not to buy it.
