BROOKLYN, N.Y. (PRWEB) May 27, 2020
2020 was expected to bring a boom to auto sales, but with a recession caused by coronavirus impacting countries across the globe, now a downturn in sales and prices are expected instead. According to recent research by IHS Markit, auto sales are expected to decline by at least 15.3% in the US and more than 12% globally. This will hit all sectors of the car market -- from dealerships selling new vehicles to private citizens selling their used and junk cars.
A recent study by Edmunds, an auto research organization, looked at the impact of the 2008 recession on the industry and found that used cars decreased in value by 10% during that recession, compared to the average of 5% in normal economic conditions. Auto junkies can expect a similar decrease in 2020.
"Recessions aren't kind to used values," said Ivan Drury, Edmunds' senior manager of insights. "With shelter-in-place mandates expected to continue through at least May for most of the country and no clearly defined end to the pandemic in sight, we can anticipate a trickle-down effect on the used market."
People looking to sell their junk car during this time might find lower offers than expected, due to the increase in the amount of cars on the market. However, companies that buy junk cars often sell the car for scrap metal, rather than trying to resell the car. While scrap metal prices may be impacted by the coronavirus recession, construction and production will still create a demand. Thus, prices for junk cars may not be as adversely impacted as those for used cars.
Citizens looking to buy a used car right now may be able to take advantage of low prices and good deals at dealerships. And buyers can expect these lower prices to stick around. According to the Edmunds study, “Once the economy begins to rebound, used vehicles are often sought after as a place for consumers to save money when the nation is coming out of a recession. As a result, used values are expected to stabilize, but not necessarily rebound significantly, since most vehicles steadily lose value as they get older.”
A popular venue for used cars are auctions, which are on hold indefinitely right now. Those looking to sell their used or junk cars are likely better off either selling online with as limited person-to-person contact as possible, or finding a junk car company to take the car. Companies such as Rusty's Auto Salvage make the process of selling a junk car as easy as possible. Sellers can take comfort in the fact that the whole sale can be done from 6 feet apart.
"Personal finances are understandably top of mind for most people right now, so if you're a car owner and you're in need of quick cash, selling your vehicle is still a decent option if you're in a positive equity position or if you have an extra vehicle in the driveway," said Drury. "A number of companies provide online trade-in evaluations and instant offers, and many dealerships offer to buy vehicles even without a purchase from their inventory. Consumers can get a good idea of what the trade-in market is for their vehicle by shopping around and determining which blend of value and convenience is right for them."
Ultimately, a recession is coming in next few months. But, for those looking to get a deal on a car, this may be the time to buy. Used car owners may want to hold off on selling their cars until the market recovers, or put their car on the private market instead of selling to a dealership.