Throughout the history of automotive asset classes, used vehicles have been considered a depreciation asset. That means the value of a used vehicle goes down over time.
Vehicles Have Appreciated in Value
In the last two years, since COVID19, used vehicles have appreciated in value for the first time in US Economic History.
What does this mean? Well for consumers it’s simple. The shortage in used vehicle inventory caused by supply chain issues, manufacturing issues, computer chip shortages have created pent up demand. Economists predict that the demand is backed up enough that will keep the values high for at least the next 18 to 24 months.
Although new car manufacturing is back online, the supply chain shortage is easing and chips are being manufactured, experts predict that the current pent up demand will take two years of manufacturing to self-correct. This means that your used vehicle has been appreciating the last two years in value and will likely continue to appreciate in the next 24 months.
That said, a bird in hand is worth two in the bush. Anyone who owns a used vehicle has a bird in hand right now. And if the last two years have taught us anything, it’s that nobody really knows that’s coming next. And although economists predict values to maintain or even continue to rise, all the economic uncertainties could easily create a scenario that your car could drop in value by 50% virtually overnight.
Sell Your Car At Peak Value
Why is now the best time to buy a car? Very simple, if you sell now you will be selling at peak value, and most consumers can take their existing equity and trade-up to a new vehicle for the same to less monthly payment. It’s a no-brainer, really. Again, all the experts predict it will maintain for 12-24 months, but the simple reality is that now is the best time to sell at peak value and get that newer, nicer, lower mileage vehicle for the same as you’re currently paying.