Has the Used Car Market Collapsed?

This is Doug Deuro and today we're going to talk about the

used

car

market

, specifically, has it

collapsed

? Have you completely fallen off a cliff? We talk about the

market

. I pay a lot of attention to the car industry, so I'm the person who asks about the car market and a lot of people come up to me and this is one of the first things they ask me: is it collapsing? Today's video is brought to you by cars and deals. My online enthusiast car auction site recently sold this and this and this and this and this okay, so let's talk about the

used

car market.

Again I have people constantly reaching out asking what's going on. They interview me in Publications People stop me at the airport What is happening? They bought a car 2 3 4 4 years ago and now they see the prices sinking in their minds and they are shocked and dismayed and need to get to the bottom of it. of this, why have prices

collapsed

and you're asking me, so let's get into it? We see this in cars and bids, frankly, all the time, with people presenting cars for sale, they want to auction them in cars and bids and they bought the car in 21 and for a certain price and the market is different now it's 24 uh and they want establish a reserve and we say uh uh no, that reserve price is not going to sell this car and they are surprised that that price is It is no longer the price that surprises them this or that, it is that they bought the car years ago, already You know, 2012, 2015, whatever, and they saw the values ​​go up like crazy and now they want to sell, it's a little late and they don't.

I don't understand why it's not worth it, you know what in their mind they thought it was worth at its peak, so the question is: the car market is collapsing. The prices of all these cars are falling, it's the market collapsing and the answer is no, this is normal. All this exercise over the last few years has really made me realize that people are kind of disastrous. I don't know if it's something related to the brain, but the kind of disasters when it comes to anything financial with any kind of memory that is required of the In the past, you bought a car, you had it for a while, you drove it, it depreciated and Then you sold it for less than what you paid, that's how it always was since I was a child, that's how it was. simple well for about three years there so from early mid 2020 until mid 23 that was not what was happening what would happen is you could buy a car you could drive it for a while and then you could sell it. for more than what you paid for it or at least the same but usually more in that period And even though it was for hundreds of years the same way I described with buying, depreciation and selling, even though that It happened for hundreds of years. for the last three years it was the other way around with buying and selling for more and now that is not happening and people think the market is collapsing, friends, no, that's how it usually is, it's normal, you buy a car, you drive it. it depreciates this is how it works this is how it is done this is not a sign of a collapsing car market, it is a sign of a healthy car market in 21 well, used cars of many brands were worth more than new ones because there were no new ones The market was not normal The supply chains had problems bringing new cars to the market and interest rates were tremendously low, which prompted people to buy the few cars that were available and because of that lack of supply of new cars, used cars increased, demand raised prices. went up because there were no new cars putting pressure on used cars as Market Force those things have changed rates interest rates are high again so borrowing is less attractive the supply chain is catching up enormously after that new Covid cars are back in stock and Used cars are getting cheap again not just cheap cheap again like they used to be like they used to work now.

I know this bothers people because I know there are people who bought cars in 22 with the idea that this would continue for a while this goes back to the crazy financial memory problems people have, but there were people who bought cars in 2122 and they thought I'm going to be able to ride this wave, buy to drive this car for a couple of years, sell it for a lot more. is that I'm going to profit and this has really upset people because that's not what's happening but that's how it happens and so when people ask me if the market is collapsing no, no, that's not we were in a bubble and the bubble has burst and fortunately for most consumers and human beings it has burst a little slowly so basically throughout the 23rd kind of spring of the 23rd throughout that year and throughout the 24th the bubble was contracting.

I wouldn't say it just exploded instantly, um and So that gave people who own a lot of cars a chance to prepare. Hey, the value is falling. Hey, another month where values ​​are going down. Hey, if I want to sell it and get out of this, hey, we're seeing this slow market decline. It didn't explode overnight, which is one of the reasons I'm so surprised that people still ask this question. It was a slow decline. You had time to get out of that car if you were worried about it, but the bubble eventually burst or deflated. and now it's time to get back to normal, of course, when people ask me this question, they usually don't ask about Ma's general macroeconomic climate, they don't need an explanation about supply and demand, which they usually ask me about is kind of a veiled question about your specific car and they ask it like it's a question about what's going on with the car market, but it's really a question of, oh man, is the market crashing because I need to get the money out? of my 997 and what I mean?

To this specific question, again, no, this is not a market crash, but also, come on, it's your short-term memory, this is what happens to cars, they depreciate and I think you know it was three years. where it was basically impossible to get it wrong. automobile world and I think after those three crazy years where we couldn't set reservations high enough and cars were still selling, it's time for consumers, people, car owners to start understanding the concept of that things are getting cheaper. again that your car will depreciate that your f80 M3 or your 997 or your Corvette is not worth as much as it is at the top of the market Your Land Cruiser is not as desirable as it was your Sprinter van is no longer going to be used by someone who gained access to remote work because the demand for that person returning to the office is lower and the prices are lower and in some cases these cars are not depreciating, they are still flat and on a different plane than 3 years ago. ago, so prices have gone up, maybe they've gone down a little bit, but they're holding steady and if that's true, if that's your car, consider yourself lucky because some cars are now back on a strong normal depreciation curve, take , for example, the first Range Rover L405 in which they appeared. 2013 and now they are a $20,000 car throughout covid they stayed high prices were strong they were in the 30s they are dropping the 981 Porsche Boxer and Cayman that came out in 13 those are flirting with the first $20,000 991 Porsche 911 that came out in 2012, they are reaching 40, which makes them quite attractive.

Shelby GT 350, the last one, the flat crank, they're under 40, now Hellcats are getting into the $30,000 range like they have been throughout my life as a car enthusiast, my entire life. I would look at some cars when they were revealed and I would get really excited because I thought one day they would be cheap and they would be amazing and then there were a few years where nothing got cheaper and that didn't happen and the cars and the deals were wildly successful at the time, It was a great time to be in the car business, you made a lot of money, you sold everything and it was fantastic and as a person who had a lot of cars at the time, it was great too. great, my cars were going up in value, everything was wonderful, I was making all this money, but as a car enthusiast, as a degenerate car enthusiast who can't stop buying cars, it was also a disappointing time, it was balancing success of the cars. and bidding with the sadness that nothing is losing value and as a car enthusiast I must say I am a little happy to see what we are getting into here, as an enthusiast who likes to buy depreciated cars it was a sad change relative to normal in that period, but now things are going in the other direction, so that's my answer: no, the market is not collapsing, unless your definition of collapse is that it is not rising or staying that high like I was at 21, to me it seems like it's basically back to normal and I have to tell you that I have a lot of money in cars and to this day, as I mentioned, the financial side of me is disappointed that I'm not going to continue to get a big raise .

You know, my GT increased in value by probably $100,000, probably 50%, um, and that's disappointing to me, right? But the enthusiast in me, who is always so excited to see cars selling at the next level and at the next level, that enthusiast. who constantly checks cars and makes offers to see if they're going for it now. I don't even buy cars like this anymore, but it's more that I was that guy for years coming out of college for 15 years, that's what I did. I would buy depreciated cars and I'm still a fan of seeing how far things depreciate so I love checking those things out and I love seeing that it's getting back to a normal depreciation curve and we're back to climate cars being depreciated from new, so that's the situation, it's not a market crash but a weakening of the market, a deflating bubble and a return to a traditional depreciation curve and I think it's time to understand that when you're introducing your cars to cars and offers and negotiating a reservation