Determining a price on a pre-owned car has never been easy. However, since Covid-19 and the subsequent crises in the automotive industry, highs and lows in car prices have become more frequent, so it can be confusing to understand whether a used car price is fair -or convenient- or not.
Buying a car is a big deal for most people and the price usually becomes the main factor to close the deal. Of course, when someone is seeking for a new car this point gets easier as every dealership offers similar values and it’s simple to compare and choose the best option. Even many associations keep records to track the top 10 best-selling new cars and their costs.
Instead, comparing and seeking used car prices is a different matter. From the moment that a new vehicle is taken out from the dealership store, its value can change for many reasons. Certainly, the resale price decreases, no matter if the car has only one day of use. At the same time, several dealers and independent persons are daily buying and selling their vehicles, even trough car buying websites, which makes it even more difficult to know what the real value of a car is.
As it was explained by Kriben Reddy, head of auto information solutions at TransUnion Africa -producer of the TransUnion Auto Dealer’s Guide-, “a used vehicle’s value is determined by a range of factors, including make, model, mileage, the condition of the car, the demand for it in the market, the colour of the car, and what a particular dealer has in stock”.
But, why is it that important to identify the factors that determine a used car price?
Well, naturally the first reason is related to the possibility of being sure you are making a good deal and not paying extra money. But, in addition, those elements used to establish a price are also heavily considered by banks and insurance companies to analyze risks and pricing their policies, as it shows in most of the car insurance calculators.
So, here there are some of the main elements used to determine a used car price:
- Good general conditions of the vehicle: this aspect includes, for example, paintwork, but actually the major element is the car mileage. The higher the mileage, the lower the price.
- Quality features: a vehicle value will strongly increase or decrease whether it has quality extras, -such as wheels, sunroof, tow bar, roof rack and tinted windows- or is just a standard or basic model.
- New cars stock: maybe this could be a circumstantial factor, however the fact that some car models, at its new version, are out of stock, make the same model used car prices rise, even getting close to new car values.
In conclusion, it is not easy to establish a used car price, but those elements can help. At this moment, the prices for this industry are a little crazy: they have increased 42.5% in less than two years, especially because of the pandemic. Still, specialists consider that used car values could fall 10-20% in 2023. It could be a good time to be aware of market prices and take advantage of opportunities.
