Car ownership shifts from liability to asset class
I went car shopping recently, and to my surprise the price of a used car matched the price of a new car. Considering that this was my first time in a car show room, even I could tell that something was wrong here. The sales associate herself agreed that the unreasonable pricing was due to the market.
Companies such as Rolls-Royce and Bentley have seen an increase in sales by 31% last year. According to the New York Times, Rolls-Royce CEO himself attributes YOLO mentality to his company’s sharp increase in sales in 2021. Luxury car brands were not the only ones who saw a surge. Toyota beat GM in car sales in the US last year. But supply chains could not keep up with the increase in demand. For those looking for quick getaways, used-cars were the only ones available regardless of the price.
As a result, the used-car market prices surged on average by 37% in October of 2021. The surge in pricing has left shoppers like myself worried. Regardless of whether or not supply-chains make a comeback, I do not see car prices going down.
The you only live once mentality is actually a fear of missing out for others. If you are shopping around for cars, your trade-in probably will never be as high as it is today. However, if you are a new car owner like me, you may be stuck in a dilemma. I either wait and save till I can afford a car, and hope that prices stay the same if not decrease. Or I agree to go along with the current prices, predicting that the prices will only continue to surge.