The Pandemic Used-Car Boom Is Coming to an Abrupt End• https://dnyuz.com
Prices for pre-owned vehicles surged.
Now, the used-car business is suffering a brutal hangover. Americans, especially people on tight budgets, are buying fewer cars as interest rates rise and fears of a recession grow. And improved auto production has eased the shortage of new vehicles.
As a result, sales and prices of used cars are falling and the auto dealers that specialize in them are hurting.
"After a huge run up in 2021, last year was a reality check," Chris Frey, senior manager of economic and industry insights at Cox Automotive, a market research firm. "The used market now faces a challenging year as demand weakens."
According to Cox, used-car values fell 14 percent in 2022 and are expected to fall more than 4 percent this year. That shift means many dealers may have no choice but to sell some vehicles for less than they paid.
The industry's difficulties have been exemplified by Carvana, which sells cars online and became famous for building "vending machine" towers where cars can be picked up. The company recently reported a quarterly loss of more than $500 million, and has laid off 4,000 employees.
In the last 12 months, Carvana piled up debt. Its stock price has fallen by more than 95 percent in the last 12 months, and three states temporarily suspended its operating license after consumer complaints.