Increasing demand for used cars in today’s recession-stricken economy has made used car sales soar in recent years, according to car dealer groups in most major metropolitan areas. The number of new car sales in the U.S. has fallen by more than 7 million over the past five years and the number of new car sales declined in the second quarter of 2020. That left many dealers with a glut of vehicles on their lots.
Falling new car sales mean more competition for manufacturers who must sell their new vehicles to meet cash burn during a two-month stoppage for the North American automotive industry. Consumers tend to become more cautious and prefer used cars more than ever in uncertain economic times. Used cars remain an important commodity in an economy where transportation without a car is almost impossible in any but a select few large cities.
Car sales also represent good opportunities for dealers. By purchasing used cars from the manufacturers, dealers can cut costs on installation and repairs. A less expensive, newer model car allows them to make a greater profit. Dealers can also take advantage of financing programs offered by some manufacturers.
Sales of used cars have increased in the U.S. since mid-2020 due to the global economic crisis. In many parts of the country, auto sales have declined sharply, and in several metropolitan areas they’ve fallen below expectations. In some markets, especially New York and Los Angeles, new car sales have declined as much as 75% during the months of 2020.
In areas such as Charlotte, N.C., Phoenix, Ariz., and Salt Lake City, used car sales have declined for every month this year. In several large markets, sales have fallen to record lows.
In addition, car sales have continued to decline in some of the nation’s most affluent suburbs. A number of high-end areas, including Belmont, San Diego, Manhattan Beach, Palm Springs, and Beverly Hills, are experiencing a decline in used car sales that has reached historic lows. Even places like Atlanta, where a recession has been forecast, have continued to experience a decline in new car sales for several months.
There are some exceptions to the overall decline in car sales in the U.S. With the addition of new models in the new and used car categories, there has been growth in sales in luxury cars, trucks, and SUVs.
Used car sales are expected to rebound in the coming months. But analysts point out that consumers’ growing uncertainty about future car purchases may result in lower car sales in 2020 than normal.
One of the reasons for the slowdown in used car sales has been the weakening economy in the U.S., combined with a significant drop in new car sales. A number of consumers are seeking ways to make ends meet even in tough times.
Another reason for the decrease in used car sales is the strong recovery of the auto industry in many countries. In Europe, the European car market is booming, thanks to record high inventories of used cars. The Chinese, who used to dominate the U.S. used car market, are now experiencing their own rebound in used car sales.
Even some areas of the U.S. are seeing a drop in car sales. For example, the Bay Area and Seattle, Washington, which were once the hottest selling markets, have both experienced a steep decline in sales of both new and used cars. Some regions of the Midwest, including Pittsburgh and Chicago, also are seeing a drop in new car sales.
A number of factors have contributed to the slowing down of sales in the U.S. The slowing economy has been a major contributing factor, as well as a number of factors that have had little or no effect on U.S. auto sales.
However, experts suggest that the biggest driver of declining car sales is the fact that there are more consumers choosing to buy their first cars than ever before. While there are certainly many reasons for consumers to buy a used car rather than a new one, the biggest and most important influence has been consumers’ desire to drive.