Car Buyers Market

  • People always ask me if I think we are in a car buyers market.  Unfortunately, the used car industry has been extremely volatile over the past 3 years, making it very difficult for the retail consumer to determine when a good time to purchase a used car is.  Before you begin filling out your used car buying checklist, ask yourself if the macro environment is currently providing a good opportunity to purchase a used car.

    Obviously, there are times when consumers are forced to purchase a vehicle, for example, if their current vehicle was totaled in an accident.  But, most of the time, consumers should try to plan their automotive purchases 6 months in advance.

    Supply and Demand

    The largest factor in determining the prices of used cars is supply and demand.  Unfortunately, the used car industry is currently suffering through a significant used car shortage.  This trend started several years ago and will continue to keep a tight constraint on used car supply.  When you are contemplating your negotiation strategy and how to buy a used car from a dealer, it is important to always keep the supply and demand dynamic in mind.

    Seasonally, the fall and winter months have traditionally been weaker for the used car industry.  Prices tend to go down when the temperature goes down.  However, due to the used car shortage, it is likely that used car prices will remain elevated during this fall and winter.

    However, there is one factor that could immediately change the supply and demand structure.  A significant decrease in the credit market could once again make the purchasing of a vehicle difficult.  Recently, credit has been flowing at a constantly improving rate.  We haven’t even come close to pre-2007 levels, but the credit markets are slowly mending.  Any interruption in the credit recovery will significantly hurt the used car dealer’s ability to ask top dollar for their supply.  Although, it will also significantly hamper your ability to purchase the vehicle if you need access to the credit markets.

    Although the supply and demand curve keeps the used car industry in a constant state of flux, a consumer who can strike at the most opportune time will always receive a good deal.  While timing your purchase is important, it is more important to get the used car buying basics correct.  Using The Guide to Buying Used Cars will provide you with the knowledge and the confidence to purchase a non-lemon vehicle that is right for you at a price you will love.