If you’re like most people, you’re probably wondering what’s going on with the price of cars. After all, the used car market has been in a slump for a while now. According to R.L. Polk & Co., the average car price is up 11% from last year. But what’s behind this?
There are a few factors at play, but one of the biggest is the rising cost of oil. When oil prices are high, it costs more to make cars and trucks. And since used cars are usually bought by people who plan to keep them for a while, the increased cost of oil affects them too.
The Economic Outlook
According to a recent study by Edmunds, the average price of a new car has increased by about 7% this year. This increase is in line with what we’ve been seeing in the used car market, where prices have also been on the rise.
There are a few reasons for this increase. First, there is a shortage of new cars available. This has led to dealerships increasing their prices to get more of the limited inventory they have. Second, interest rates are still relatively low, which means people are able to afford to buy a new car but also want to purchase a used one as well. And finally, the economy as a whole is improving, which means people will have more money to spend on cars.
Used car prices are definitely increasing right now, and it’s likely that they will continue to do so for the next few years. If you’re thinking about buying a car soon, it might be a good idea to check out the used car market first to see what prices are currently available.
The Impact of Trade War
Used car prices are on the rise as the trade war between the U.S. and China continues to escalate. The increased tariffs and trade restrictions have caused the cost of imported goods to increase, which in turn has led to an increase in the price of used cars.
The National Automobile Dealers Association (NADA) reports that the average price for a new car increased by $3,095 from February 2019 to March 2019. However, the average price for a used car rose by $2,374 over the same period. This is primarily due to the Chinese tariffs on American vehicles, which have driven up the cost of imports.
The increase in used car prices has ramifications beyond just the purchase of a vehicle. It could impact sales of new cars as well. The New York Times reports that approximately half of all new car sales in America are made using foreign parts. If those parts become more expensive because of tariffs, then it could lead to a decline in sales.
Rising Interest Rates
Used car prices are up because interest rates are rising. Since used cars typically have higher rates, the increase in interest rates makes them more expensive to buy.
Rising Inflation
Used car prices are up because of rising inflation. Inflation is when the cost of goods and services goes up over time. This affects everything from food to gasoline. The cost of a used car goes up because the materials and labor that went into making it have also gone up in price. When people have to spend more money on everyday things, they tend to spend more money on cars, too.
Automotive Suppliers Respond
Automotive suppliers responded to the recent increase in used car prices by citing a number of reasons for the increase. Some suppliers blamed the recent increase on an oversupply of new cars, while others said that dealers were making more money on used cars than they ever had before. One supplier said that dealers were deliberately inflating used car prices in order to make more profit on each vehicle.
Used Car Prices Are Up Because…
The reason used car prices are up is because there is a glut of cars on the market. People are buying cars much more frequently than they used to, and this has caused the price of used cars to increase. Additionally, automakers have been making new models more often in recent years, which means that there are more cars available for sale.
Conclusion
Used car prices are up, and there’s a good reason for that. Cars are becoming more expensive to maintain and repair, which is putting pressure on the used car market. Our society is growing older and more health-conscious, meaning that people are looking for cars with lower gas mileage and fewer emissions. And as technology continues to improve, so do the features of new cars. This means that used car buyers have more options than ever before when it comes to finding the right vehicle for their needs.