A wise person once told me; “as with anything in life, change seems to be the only constant we can count on”. Yes, life as we know it has changed - a lot, (maybe even more so in just these last few months). What I want to discuss today is the biggest change in the used car market that I’ve seen in my 30+ years in the car business. First let me digress back to the first big used car market change I witnessed, right after 9/11. As America and many places around the world were stunned, the economy almost came to a standstill here in the United States.
Very shortly after, General Motors (partnered with GMAC) announced the “Keep America Rolling” campaign and introduced a 0% loan for 72 months on all of their automobiles. It was the first introduction of a 0% auto loan and it worked VERY WELL. What we witnessed at that time was people trading in their current year models for the exact same vehicle simply because they only wanted to trade “loans” and have one for 0%. As you can only guess, NOBODY was buying the current year model (used) vehicle trade-ins when they could get a new one for 0%. Those cars simply stacked up on the used car market and the values dropped very fast.
GM at the time, kept their plants rolling pushing out new product to meet the new car demands. This put an even larger stress on the used car market and their values, and it only got worse. It took the books months to catch up back then and we were all surprised that a $20,000 book value car was only worth maybe $12,000 at the time.
Fast forward to now, the COVID days. Back in March (2020), when it became known that a virus could have horrible and even life-threatening impacts, shutdowns became the norm. That included the automotive factories. But… like they did after 9/11, most manufacturers came out with a 0% offer even as they were shut down and had zero production.This time, it had nice things tied to it like, “no payments for 180 days” as an extra incentive. That too worked very well and new car sales once again flourished.The biggest difference between the 9/11 downturn for used car values and now is that the factories did not shut down back in 2001 like they did in 2020. Because of that shutdown, a new car shortage became real and conversely the used car market got extremely HOT. People were off work or at least working from home. Many seemed to have more free time on their hands and they simply shopped more. (See recent Amazon stock price inflations for validation). The used car market became so hot, new car dealers were keeping 200,000+ mile trade-ins to retail just to keep up with the demand (something most of us have never done). Values soared, sometimes $2,000-3,000, maybe even $5,000 over book. With better technology in modern day, the books seemed to catch up somewhat faster than they did in 2001 but still, we’d see trade-ins we may have appraised a year ago that were worth the same or more.
How does this tie in to “why or how is this important to me”? New car factories are back online and producing again, shipments are coming in daily, inventory levels are creeping back up and yes, they’ve kept the incentives high. But… there is still a huge used car shortage. So, if new car prices and incentives are still good and the used car market is still hot, what does that mean? You guessed it, it’s a GREAT time to trade. That’s not just “salesman” talk, it really is one of the best times to trade that I have seen in my 30+ year career. Many of our employees have done it, including myself. It’s true, we need used cars of all makes and models. Bring your car, truck, or SUV in today. You might be very pleased to see just how much it’s worth, plus we’d love to show you all the new product and technology Volkswagen has built. It’s simply amazing.
Stay safe,
John Chauvin, General Manager
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