Have you ever noticed how there are more used cars for sale this year than usual? One might assume that everyone is trading in their vehicles for brand new ones. But, that’s not usually the case!
Used car businesses have reported bumper growth for 2015. While there is still a few days left of the year, many traders have beaten past sales records. Rather than worrying about the excess stock in their showrooms, they seem to sell cars like hot cakes!
Source: Wikimedia Commons
So, why is that happening? It turns out there are a few different reasons for the growth in the used car market. They are as follows:
Consumers can’t afford brand new cars
Perhaps the most obvious fact of all is that many motorists are broke! Despite the new lease deals on offer, car buyers are sticking with used models. They are more affordable, and the total cost of ownership is less.
Some motorists buy used cars to escape the depreciation hit experienced with new ones. You will often find buyers getting behind the wheel of one to three-year-old vehicles.
Dealer costs are lower when it comes to selling used cars
When a car dealer buys a vehicle from someone or at auction, they have costs to bear. The bulk of those expenses is to do with preparing the car for sale.
By preparation, I mean making the car roadworthy and fixing any major faults. The amount they pay on average is lower than say five or ten years ago. Why is that, you might be wondering?
Car makers have invested a lot in building reliable cars with longer service lives. They tend to use suppliers like Lucas and CCTY Bearing rather than “unknown” brands. That means they can get assured of high-quality parts. As a result, car dealers only have to pay for minor repairs and servicing. And that increases their bottom line.
There is more choice on the market
You might assume that the used car market comprises of old vehicles that are only fit for the scrapheap. The thing is; today’s models are newer and offer the features modern motorists want!
There was once a time where air conditioning was a luxury only found in high-end cars. Nowadays, you’ll find it and climate control as standard even in small city cars!
And because they are better engineered, today’s used cars are more reliable. They also have longer service intervals, helping to keep costs down for owners. Now used car owners can enjoy the same benefits new car buyers do!
Insurance costs are lower on used cars
When you get car insurance quotes from places like Progressive, consumers notice something. The cover for new and used cars differs! As you know, auto insurance premiums get calculated based on risk. They also take into account the cost of repairing or replacing a car if a claim gets made.
On average, insurers pay out less for used cars than they do for brand new ones. They hate paying out for new car claims because they can’t “write off” any vehicles in most cases. As a result, they could end up paying tens of thousands!
For the consumer, lower auto insurance costs are one reason to buy used cars. They are only concerned with the cost of their monthly or annual expenses. If those costs are lower with a used car, it makes sense for them to avoid new ones.