Désolé, cet article est seulement disponible en anglais américain. Pour le confort de l’utilisateur, le contenu est affiché ci-dessous dans une autre langue. Vous pouvez cliquer le lien pour changer de langue active.
Purchasing a brand-new car is always a wish for many who want a vehicle. However, going for a used car becomes the only working option due to many different circumstances. It is okay when you choose to purchase a used car. Used cars are, in fact, the most preferred and sort after vehicles since they are less costly with affordable maintenance. Unfortunately, since 2020, the market prices of used cars have skyrocketed way higher than ever before. But why is that happening so?
If you plan to secure a used car, you are highly advised to purchase extra protection. A used car extended warranty is what you need to keep your used car in check and perform in the best manner possible. We are here to offer the protection your used car deserves and make you enjoy peace of mind from all unforeseen damages to your vehicle. This article gives a detailed insight into what could be the reason behind the ever-increasing prices of used cars even in 2023.
Shortage of microchips.
All modern cars need a small computer system responsible for a vehicle’s functionalities, such as air conditioning, engine diagnosis, infotainment system, gas pedal, and other powertrain functions. However, since the 2020 pandemic, global microchip production has surged. It is evident that in 2020, most chip manufacturing companies shut down their plants for various reasons, such as poor supply chain management.
It is also clear that in 2020, most chips produced were mainly meant for video game consoles since most people were under lockdown and the need for such electronics was low. Also, there needed to be more new car production; thus, chip production focused on electronics rather than cars. Since things are returning to normal, the production of new vehicles is still low. That means the used car has a much higher demand, hence the price rise.
Prices of new cars are high.
Another reason for the increased price of a used car is that the cost of new vehicles is still high. New cars have, for the last couple of years, been rising. The high prices of new cars also affect the cost of used vehicles, making them rise. There are several explanations for why new car prices are high;
- Structural and material design- New car manufacturers are being pushed to produce cars using less harmful structures in a collision. That has pushed for using modern lightweight materials at an extra cost. Also, the sizes of most new vehicles have gradually increased hence the need for more structural materials.
- Climate change effects- Since automobiles are the largest emitters of toxic fumes that have resulted in global climate changes, automobile companies are now embracing technology to combat the problem. Manufacturers are now investing loads of cash in embracing technology that could reduce harmful emissions.
Pro covid19 effects
Covid ripped through every global sector and left no stone untouched. Such international sectors include; Manufacturing, service provision, and supply chain management. Most companies laid off workers to curb the spread of the virus, while some shut down their operations due to the harsh economic status at the time. In the automobile industry, the big firms operated on a small scale, reducing the production of new cars.
That resulted from a shortage of raw materials used in manufacturing, such as microchips and aluminum used in making body panels. The effects of Covid19 are still in place since the global economy has not yet recovered fully. With reduced production of a brand-new vehicles, many people owning used cars are sticking to their cars. This also leads to decreased used vehicles in the market, thus increasing the price of available ones.
Will prices of used cars drop in 2023?
That is one question that many car enthusiasts are struggling to get an answer to. Car experts on their side expect a slight decrease in the price of used cars. The supply chain is expected to rise steadily in 2023, reducing the effects of a shortage of raw materials. On the other side, chip production is slowly returning to life, with most manufacturing returning to normalcy.
Conclusion.
With 2023 with us here, there is less expectation on whether the price of used cars will drop. Most experts have foreseen that the price could come down at a tiny margin. If you are in a rush, you can still dive in head first, caring less about the price. However, those still in awe about the costs of used cars can still wait and gauge the market trends before making a purchase.
If you are planning on purchasing one, you are also advised to get extra protection for the car in the form of a warranty on used vehicles. A-Protect Warranty Corporation is here to set things in line for you. We have among the most affordable and comprehensive extended warranty plans you need to purchase for your used cars. Get in touch with us for a free quote via phone using +1-866-660-6444 or email us at info@a-protectwarranty.com.