The Top Five Reasons Why Used Car Sales Numbers Are Increasing!
Other than when you buy a house, purchasing a new car is probably one of the most expensive decisions that you are going to make in your lifetime, and as such, it’s not one that should be made on a whim.
We have been keeping an eye on the used car market, and have noted the massive increase in the number of people choosing to go down the used car route rather than buying fresh out of the showroom. In fact, our studies indicate that “Findings from the Q1 2019 State of the Automotive Finance Market report shows that the percentage of prime (61.88 percent) and super-prime (44.78 percent) consumers choosing used vehicles reached an all-time high.”
So, why have we seen such a huge increase in the investment being made in used cars, as opposed to brand new cars over the last couple of years? Here are just a few of the driving factors.
- The increasing cost of new technologies
We are in a digitally-driven age, where everything around us is evolving so rapidly that it can be hard to keep up. There has been massive growth in the automation sphere and we are now surrounded by SMART technologies, which seemed to be a distant reality not too long ago.
Modern cars now come with electrical, innovative dashboards, cameras, engines and everything in between; it’s excellent that we now have more economical, environmentally-friendly vehicles, but that does come at a cost. It’s not incredibly expensive to buy new cars, yet many people simply can’t afford it.
- Off-lease vehicles are becoming available
When you used to mention “used cars” it conjured up images of going to a dealership and shifting through a bunch of cars in bad condition until you found the one that was the least damaged. However, that couldn’t be further from the truth and there is now a wonderfully large contingent of 3 – 4-year-old cars coming onto the market every year.
Why are so many of these barely used cars becoming available? It’s simply because more and more people are choosing to take the option to lease rather than buy their cars. Leased cars usually have a limit on the miles that they can be driven per year or before they are returned and this means that when you buy a previously leased car, you are getting something with unusually low mileage on it.
As leasing becomes a more popular option, it means that more and more off-lease cars are becoming available as their lessees return them and get newly leased vehicles.
- The issue of depreciation
Everyone that knows anything about cars knows that they depreciate incredibly fast. In fact, just driving a car out of a showroom will put a massive dent in the resale value of it. Most cars undergo their most dramatic depreciation period in the first two years of ownership and that means that new cars depreciate very quickly once you buy them.
Most used or off-lease cars have already had their depreciation period and as such, are already cheaper and won’t depreciate as swiftly or depreciate as much by the second owner. Owners of used vehicles won’t have to take such a hit on their cash should they wish to sell their car after a year or two; so many people have seen the sense in investing in a used car.
Let’s be honest, SUVs are a pretty big deal and are some of the most popular vehicles on the market in the US and Canada. They are relatively recent cars; therefore, they have largely been purchased as new vehicles – leaving a large variety of less popular vehicles in the used-car department.
However, we have now reached the stage where modern SUVs are being traded in for new ones, resulting in a large increase in the number of SUVs found in the used market. Furthermore, there has been a marked increase in the number of SUVs being purchased and as a whole, this has impacted the overall sales numbers in the used vehicle market.
- We’re becoming more environmentally aware
This may not be a huge factor, but considering that Canadians are very eco-conscious, we love to think that this is one of the reasons why more people are buying used vehicles than before. Although it’s widely acknowledged that the fumes from vehicles are damaging to the environment, one of the lesser-known facts is that most of the damage to the environment actually occurs during the sourcing and manufacturing process.
So, more people buying more used cars is a good thing for the environment, as it means that we are not continually increasing the demand for newer models that are so similar to the ones that are already on the market.