Newsletter: Want to sell your car? Prices are amazing now
Good morning. I’m Rachel Schnalzer, the L.A. Times Business section’s audience engagement editor, back with our weekly newsletter. Now is the best time ever to sell a used car — as long as you don’t need to buy a car to replace it.
As my colleague Daniel Miller reported, the used car market has been roiled by a once-in-a-generation set of circumstances brought on by the COVID-19 pandemic.
Thinking about selling your car? Here’s what’s going on, as reported by Miller:
Used cars are in very short supply, Miller reports, which has led to soaring prices in Los Angeles and across the United States.
To paint a picture: During the week that ended April 4, there were roughly 101,000 used cars for sale in the L.A. region. That’s down 12% from the same week in 2020 and down 18% from the same week in 2019, according to data provided by Cox, a car services company. The average list price was $22,963, 12% higher than a year earlier and 14% higher than two years earlier.
“If you have an extra car to sell … there may never be another time greater than this,” said Eric Ibara, director of residual values at Kelley Blue Book, a subsidiary of Cox.
What’s causing the shortage?
There are a few factors contributing to the dearth of used cars on the market.
The pandemic’s effect on the rental car industry is a big one. Usually, rental car companies sell their cars once the vehicles are 12 to 18 months old. That’s a big source of used cars. But when the pandemic began limiting travel, rental car companies took a major hit and quickly sold significant chunks of their fleets without buying replacements. (That’s why renting cars is so expensive lately too.)
“Sales into rental fleets were down 50% last year, which means ... 12 to 18 months [later] the supply coming into the used-car market would be down by 50%,” said Larry Dixon, a vice president at the National Independent Automobile Dealers Assn. “It is going to get worse as the year progresses.”
Another big factor is demand. People were slow to buy cars during most of the pandemic, but with vaccination rates rising and restrictions lifting, that’s changing. “We have the worst case of cabin fever,” Dixon said. “People want to drive and go places. You have ... very strong demand.”
As my colleague Hugo Martín reported, Southern Californians are favoring road trips for the upcoming Memorial Day holiday weekend.
Then there’s a bit of scarcity of new cars. Vehicle production has been slow due to an ongoing global shortage of semiconductors. So some people who normally would go for a new car are turning to used options instead.
Among other factors: Banks have been allowing consumers to delay car payments during the pandemic, so there have been fewer used cars entering the market through repossessions. In addition, people are trading in their used cars at a slower pace.
Used car prices are expected to rise in the coming months. “You cannot make more 3-year-old used cars,” Ibara said. “So if you can’t increase supply, the only thing that can happen is the prices go up.”
If you need to buy a used car, good luck.
Although selling your car now is likely to get you more money than usual, you won’t necessarily come out ahead if you need a replacement vehicle. “If you’re selling a used car to buy another car, it could be difficult. I’ve been in the industry 30 years now and I have never seen the market as hot as it is,” Ibara said.
Other stories you may find helpful
◆ Gasoline prices in the Southeast surged after the pipeline hack, but L.A. is not immune to gas woes. Nancy Rivera Brooks reports on why California’s gas prices are so high.
◆ Fitness company Pure Barre charges job applicants $1,800 for their training. Columnist David Lazarus explains why employment lawyers consider this “a class-action attorney’s dream.”
◆ “Bitcoin, dogecoin, NFTs, GameStop — is this the peak of investment absurdity?” columnist Michael Hiltzik writes.
◆ Are 529 college savings plans still worthwhile? Certified financial planner Liz Weston breaks down their value, especially for grandparents.
◆ Ready to travel again? You’re not the only one considering a national park road trip, Hugo Martín reports.
◆ Six figures from freelancing? SideHusl.com’s Kathy Kristof writes about a platform that she says can make gig work lucrative.
One more thing
As COVID-19 restrictions lift, gyms are eager to welcome back their members. “But gym operators — and their customers — face a changed world,” my colleague Roger Vincent reports.
Former loyalists to a particular gym may now be on the hunt for something new. “Everything is being reset by COVID, when people put their memberships on freeze or terminated them,” real estate broker Scott Burns said. “When they come back, they are going to look at their options and see what else is out there.”
Many gyms are going to great lengths to show off their COVID-19 safety precautions.
Indoor gyms also face competition from those who prefer to work out outside. “You get fresh air and there is no ceiling. It’s really kind of freeing,” said Imari Williams, who runs a fitness club in Santa Monica. Read the rest of the story here.
Have a question about work, business or finances during the COVID-19 pandemic, or tips for coping that you’d like to share? Send us an email at firstname.lastname@example.org, and we may include it in a future newsletter.