Financial Experts Warn That Used Car Price Bubble Could Pop With Big Consequences In 2022 | Carscoops carscoops
, a multinational professional services provider, writes in a recent report that although fluctuations in used-car prices are common, “decades of data show nothing like 2021.” The report claims that in November 2021, the wholesale prices for used cars were up 44 percent over November 2020., automakers have struggled to produce new cars, pushing more and more buyers into the used car market.
Given the complexities of the global market, though, there are a number of possible ways for the process to happen. “The question is not only when there will be sufficient supply to meet normal demand, but when supply will catch up with the cumulative shortage that continues to build up,” the report’s authors write. “And then there’s the question of demand: How many customers who didn’t buy simply because of shortages will still be in the market?”Other variables will also play a role, such as whether or not the economy will still be growing rapidly when automakers resume production.
Indeed, the situation is complicated and all stakeholders will have to prepare themselves for an uncertain future. Dealers that have benefited from high profits will still have to look forward to a future of EVs, direct buying, and lowering margins. Lenders and buyers may also face difficulties if the market for used cars contracts and consumers are suddenly holding vehicles that are worth less than they owe.
KPMG sees multiple possible scenarios with inflation, interest rates, and the wider economy all playing a big part in how things will play out. One thing is almost certain, though, once automakers can resume production, the prices for used cars should shrink. The only question is how quickly.
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