by Christopher Boyle
LONG ISLAND, NY – When it comes time for the average consumer to consider the purchase of a new vehicle, reports show they’re turning more often than not to used cars as opposed to new ones for a variety of compelling reasons, one of which is an attempt to save some money; however, there are other factors… including environmental ones, believe it or not.
Overall, car dealerships across the United States are reporting that pre-owned vehicle sales are taking up a regular and significant part of their overall business, and have been so for quite some time now. In 2016, the nation’s top 100 car-selling businesses disclosed a 6.6 increase in used car sales across the board, closing out the year with a total of $57.9 billion in revenue from 2.84 million vehicles sold; this accounted for over 27 percent of those businesses’ revenue, the third year in a row where such a large amount of used vehicle sales have accounted for such a significant percentage of income with top dealerships.
Overall, the demand for used cars stems from numerous trends, including a slowly-recovering American economy that is causing families and individuals to strive to get the most for their hard-earned dollar; an influx of off-lease vehicles into the marketplace, resulting from a large uptick in car leasing in the past decade; and the overall increase in quality auto manufacturers – both foreign and domestic – have been packing into their products, resulting in greater reliability and longevity. In years gone by, a motorist could get bragging rights simply by hitting 100,000 miles on their odometer; fast-forward to today, where 200,000 worry-free miles and more is quickly becoming the norm, lending greater validity to the notion of purchasing a used car than ever before.
Of course, demand always bumps up price, but buying used is nonetheless vastly cheaper than new. Still, according to reports, the average price of a pre-owned vehicle in September of 2017 jumped up 2.77 percent from August, and an increase of 6.3 percent from the same time one year ago; this represents the fifth month in a row that the used car market has shown such growth in pricing.
But a new factor has arisen that has unexpectedly generated even greater demand for used cars, and that’s the recent glut of hurricanes that have hit the United States; with massive storms hitting both Florida and Texas in an extremely short amount of time, the market is suddenly finding itself having to replace hundreds of thousands of vehicles due to not only residents of those states having had cars destroyed due to flooding and high winds, but also dealerships whose inventories have suffered similar fates. Families who rely on having a vehicle – or multiple vehicles – are suddenly finding themselves without any way to get to work or anywhere else, and are desperate to replace their losses.
Hurricane Harvey, which devastated parts of Texas, was responsible for the destruction of up to 500,000 vehicles alone, and when you factor in the additional havoc wreaked upon Florida by Hurricane Irma right afterwards, you can add another 200,000 cars to that amount. Needless to say, this has driven used car demand through the roof, as dealerships across the nation find themselves shipping all the inventory they can to those afflicted areas.
Estimates are that at least 60 to 70 percent of the vehicles being replaced due to the devastation of Hurricanes Harvey and Irma will be used, as opposed to new, showing that the majority of people who have lost their source of transportation will be opting for a pre-owned replacement, especially when taking into consideration the affordability and reliability of the modern used car market. Overall, electric/hybrid vehicles are expected to be the most popular when it comes to pre-owned sales, but in a dire situation such as the one created by Harvey and Irma, people will likely take any sort of car that is available as long as the quality is there.
The used car market has been showing regular and significant growth in recent years; the greater amount of vehicles available and their increased quality has created an ever-increasing demand for them by consumers trying to save money in a still-sluggish economy, and it’s a financial situation that is proving to be win-win for buyers and sellers alike. But when you add in the unexpected effect that Mother Nature can have upon demand upon the market – such as the unfortunate destruction wrought by Hurricanes Harvey and Irma – you can easily see how used car sales are starting to, in many ways eclipse the sale of new cars in many financial brackets. More and more people are turning to used cars as a very real, viable alternative to expensive new cars to free up money for more pressing quality-of-life matters, creating a competitive, lucrative, and satisfying pre-owned automotive marketplace.