Unless you’ve been living under a rock, you know that COVID-19 has changed the world in many ways. One of those ways has come in the form of the economy and shortages of goods. The automotive market in particular has seen some wild changes because there has been a huge shortage of computer chips required to build new vehicles. As a result, new vehicle inventories across all manufacturers have come to a stand still.
This created the perfect market conditions to drive used car prices.. through the roof. No seriously, in the US it’s been reported used car values are up 40% over what they were worth in February 2020, right before the pandemic. That’s insane. Business Insider further report that the average 9 year old car changed hands for about $13,250 in June 2021 which is approximately 30% more than June 2021. Think about that, if you bought a car in June of last year and drove it for a year racking up miles and wearing it down, it has actually appreciated since your purchase.
This brings an interesting option to many car and truck owners, as they could very well make money on their vehicles that have been in all other times depreciating assets. But if you sell now, what can you buy if you still need a vehicle? After all, car prices are up all around, you’re going to be selling high but also buying high. Well there is an option.
You could buy a beater or an economy car. Seriously, it’ll make it worthwhile for you financially. Here is an example for you, I owned a 2019 Audi A5 with the Premium Plus Package, back in 2019 it had an MSRP of around $44,000. I bought mine for $41,800 and had put on about 18,500 miles on it before my Audi dealer called me and said they needed my trade. I’ve seen dealers do this in the past so I kind of just ignored them but the sales guy followed up with some estimated pricing of what they were willing to pay for my car and they weren’t really keen on selling me anything. I ended up going down to the dealer and traded my A5 in for $40,000. It cost me about $1,500 to drive a luxury sedan for almost 2.5 years. The A5 was my daily ride and I thoroughly enjoyed it. I still needed a daily ride. I found a 2010 VW Golf with 102,000 miles on it for $4,200 and I’ll be driving that until prices cool off.
Is it worth it? That depends on your situation and what you value. For me, the A5 was my commuter car, and while it was a nice ride I didn’t need it. The Golf fits exactly what I need it to do and it’ll be fine. I also think getting out of the A5 before prices really tanked made it an appropriate deal.