At the end of 2019, the first cases of human infection with the little-known SARS-CoV-2 coronavirus were registered in China. In just a few months, it spread across the planet and in March 2020, the WHO declared the beginning of the CoViD-19 pandemic. This event significantly impacted all areas of activity and caused global changes in the used & salvage car market. In our article, we will take a detailed look at the events preceding the pandemic and the market dynamics during the fight against CoViD-19, as well as talk about the situation in the first months after the lifting of quarantine and today.
The Situation on the Market Before the Pandemic
Before the pandemic, the used car market was relatively stable. At the beginning of 2019, it showed a slight increase, thanks to which the average cost of such vehicles reached $20,000 for a standard sedan and $25,000 for an SUV. At that time, this was a reasonably high price. This was due to the high demand for used models and increased prices of new cars. It was also possible to reach the $20-25 thousand mark due to the stability of the economy and the stability of the labor market.
If you rewind time a little more and study the situation in the used car market, you can quickly notice a trend towards an annual increase in prices for such vehicles. So, from 2014 to 2019, the average used car cost grew by about 4.5% per year. At the end of 2019, when CoViD-19 had just appeared in China and had not yet spread to Europe and North America, prices were also recorded. However, it amounted to 5% compared to the previous reporting period.
Changes During the Pandemic
The pandemic has become a severe test not only for people around the world but also for various industries. It has also affected the automotive industry. The market for new and used cars has lost its inherent stability and has begun demonstrating unpredictable dynamics. This continued from 2020 to 2023 until the end of the pandemic.
2020-2021
At the beginning of 2020, the first problems related to CoViD-19 appeared in the automotive industry. Due to quarantines introduced in Asian countries, thousands of enterprises were shut down, followed by severe disruptions in the supply chain of materials and components necessary for the production of cars. This forced most companies to reduce the number of models produced. Some even closed their enterprises, losing the opportunity to receive everything necessary to assemble vehicles. Then quarantines began to be introduced in Europe, North America and other continents. This event became the main reason for the sharp decline in sales of new and used cars.
Despite the pessimistic forecasts of experts, by March 2020, the used car market had already shown a trend towards an increase in key indicators. This was explained by the desire of people to find an alternative to public transport, which was stopped or operated with stringent restrictions. This circumstance sharply increased the demand for inexpensive used models, which buyers considered temporary transport during the pandemic. Rapidly growing demand has led to the fact that prices for used cars have also gone up. In just six months (from the beginning of March to the end of August), the cost of used models in different countries has increased by 15%, which was a real surprise even for well-known experts.
In 2021, people could adapt a little to life in a pandemic. This improved the situation in various industries, but there were no global changes in the automotive industry. On the contrary, the trend towards decreasing demand for new cars and increasing used ones continued. In the first half of 2021, there was a sharp increase in the popularity of online auctions. AutoBidMaster and other well-known platforms became popular among people who wanted to buy a used car without leaving home. This event made such transport even more accessible to buyers with different financial capabilities.
In August 2021, the growth rate of used cars exceeded 40%. This meant that after the pandemic hit, you could buy a particular model for 40% more than it did before CoViD-19 hit our world. The vast demand quickly began to deplete used car stocks. Some of them gradually became rare, even at car online auctions, further increasing their value. On average, the price of a typical sedan exceeded $26,000, and an SUV—$35,000.
How the Pandemic Transformed the Used Car Market: A Recent Analysis
At the end of 2019, the first cases of human infection with the little-known SARS-CoV-2 coronavirus were registered in China. In just a few months, it spread across the planet and in March 2020, the WHO declared the beginning of the CoViD-19 pandemic. This event significantly impacted all areas of activity and caused global changes in the used & salvage car market. In our article, we will take a detailed look at the events preceding the pandemic and the market dynamics during the fight against CoViD-19, as well as talk about the situation in the first months after the lifting of quarantine and today.
The Situation on the Market Before the Pandemic
Before the pandemic, the used car market was relatively stable. At the beginning of 2019, it showed a slight increase, thanks to which the average cost of such vehicles reached $20,000 for a standard sedan and $25,000 for an SUV. At that time, this was a reasonably high price. This was due to the high demand for used models and increased prices of new cars. It was also possible to reach the $20-25 thousand mark due to the stability of the economy and the stability of the labor market.
If you rewind time a little more and study the situation in the used car market, you can quickly notice a trend towards an annual increase in prices for such vehicles. So, from 2014 to 2019, the average used car cost grew by about 4.5% per year. At the end of 2019, when CoViD-19 had just appeared in China and had not yet spread to Europe and North America, prices were also recorded. However, it amounted to 5% compared to the previous reporting period.
Changes During the Pandemic
The pandemic has become a severe test not only for people around the world but also for various industries. It has also affected the automotive industry. The market for new and used cars has lost its inherent stability and has begun demonstrating unpredictable dynamics. This continued from 2020 to 2023 until the end of the pandemic.
2020-2021
At the beginning of 2020, the first problems related to CoViD-19 appeared in the automotive industry. Due to quarantines introduced in Asian countries, thousands of enterprises were shut down, followed by severe disruptions in the supply chain of materials and components necessary for the production of cars. This forced most companies to reduce the number of models produced. Some even closed their enterprises, losing the opportunity to receive everything necessary to assemble vehicles. Then quarantines began to be introduced in Europe, North America and other continents. This event became the main reason for the sharp decline in sales of new and used cars.
Despite the pessimistic forecasts of experts, by March 2020, the used car market had already shown a trend towards an increase in key indicators. This was explained by the desire of people to find an alternative to public transport, which was stopped or operated with stringent restrictions. This circumstance sharply increased the demand for inexpensive used models, which buyers considered temporary transport during the pandemic. Rapidly growing demand has led to the fact that prices for used cars have also gone up. In just six months (from the beginning of March to the end of August), the cost of used models in different countries has increased by 15%, which was a real surprise even for well-known experts.
In 2021, people could adapt a little to life in a pandemic. This improved the situation in various industries, but there were no global changes in the automotive industry. On the contrary, the trend towards decreasing demand for new cars and increasing used ones continued. In the first half of 2021, there was a sharp increase in the popularity of online auctions. AutoBidMaster and other well-known platforms became popular among people who wanted to buy a used car without leaving home. This event made such transport even more accessible to buyers with different financial capabilities.
In August 2021, the growth rate of used cars exceeded 40%. This meant that after the pandemic hit, you could buy a particular model for 40% more than it did before CoViD-19 hit our world. The vast demand quickly began to deplete used car stocks. Some of them gradually became rare, even at car online auctions, further increasing their value. On average, the price of a typical sedan exceeded $26,000, and an SUV—$35,000.
2022-2023
In 2022, scientists created the first truly effective vaccine against coronavirus. This event launched the process of gradually lifting various restrictions, which, in turn, allowed automakers to begin regaining their lost positions in the automotive market. Despite this, the used vehicle market remained stable. Growth was observed throughout 2022, but its rate was significantly lower than in the previous two years.
By the end of 2022, new car manufacturers actively began using sales promotion methods. They organized various promotions, offered good discounts and conducted large-scale advertising campaigns. All this positively affected demand and new vehicles began to gain popularity again. However, contrary to expert forecasts, the used car market remained stable. Even in the last months of the year, it showed positive dynamics, which surprised many. Prices for used models did not increase, but there was no significant decrease either.
At the beginning of 2023, most countries lifted the strict restrictions related to the pandemic. This gave new car manufacturers even more freedom of action, and they took advantage of the situation. Thus, demand for such transport increased in the first months of the year, leading to a slight decrease in prices for used models. However, their cost remained 35% to 40% higher than before the start of the pandemic.
The Situation on the Market After the Pandemic
In early May 2023, the WHO officially declared the end of the pandemic. However, even after that, many countries worldwide remained in a tricky epidemiological situation. In this regard, the used car market changed unevenly. There was a slight decline in those countries where most of the population was vaccinated, and the government lifted various restrictions. It was associated with increased demand for new models, which almost all well-known car manufacturers massively presented. In countries where CoViD-19 was not fully dealt with, the market showed stability and sometimes even slight growth. Considering all of the above, it should be noted that this situation was observed for several months and lasted until all countries lifted restrictions related to the coronavirus.
By the end of 2023, when the world gradually forgot about CoViD-19, the used car market became even more stable. The initially expected decline never happened, so the prices for various vehicles remained virtually unchanged compared to 2022. Only in some countries, where people who bought used vehicles during the pandemic began to sell their cars en masse and buy new ones, was there a short-term decline in the market. It was caused by a naturally occurring imbalance in supply and demand, which many experts predicted. However, the situation gradually stabilized and became approximately the same on all continents.
The Current Situation in the Used Car Market
Having gone through a difficult period of the pandemic, humanity is continuing the protracted recovery process in various industries. It requires the right approach and making optimal decisions for each specific situation. In the automotive sector, recovery from CoViD-19 is going quite well. Most companies have regained their lost positions and reached the figures before introducing strict restrictions. This became possible due to the growth in demand for new cars. In different countries of the world, this has led to an increase in the number of vehicles produced monthly and an increase in their sales volumes.
The used car market is currently stable. Slight declines are periodically replaced by periods of growth, which allows it to stay at approximately the same level. Small price fluctuations typical for the beginning of 2024 are not currently observed; therefore, according to statistics, you can buy a used car today for 25-30 thousand dollars.
Despite the stability observed in the used car market for many months, its future remains uncertain. Most experts refuse to give exact forecasts as they cannot fully assess the long-term consequences of the pandemic. These can be very different and lead to further drastic changes in the market. Today, the unstable situation around the world adds to these consequences. Various wars affect the automotive industry and typically prevent it from developing.
The CoViD-19 pandemic has catalyzed global changes in the used car market, accelerating its growth and bringing the indicators to a previously unattainable level. However, after the quarantine and lifting most restrictions, the situation gradually stabilized, and the used car market no longer experienced sharp ups and downs. In the future, the problem may turn in both directions. Everything will depend on various global events, some already happening.
