2010 retrospective – no year like it for used cars
2010 proved to be a strange year for the automotive market… people stopped seeking new vehicles in favour or used cars. This is a pretty rare occurrence. Suddenly it was considered cool to drive a used car. As a result, new car prices held steady or were discounted but used cars began to climb beyond the price their traditional market could afford Read on to learn all about why used cars might not have been a bargain at all in 2010.
What were your impressions of 2010? Was it a year of hope…or a year of despair?
At best, 2010 might be described as a tepid economy. It was like being in a holding cell. Waiting. Waiting. And more waiting. Would the news be good? Or would it be bad? Would there be any news at all? (No, as it turns out, there wouldn’t.)
Like every other industry, the vehicle manufacturing and sales sectors felt this lack of anything in particular happening. But they felt it in their own unique way. People were still driving, of course, but spanking fresh models, usually in hot demand, just weren’t flying off the lots.
Just a year earlier, when the world seemed to be spinning into chaos, seasoned observers were predicting theuntimely end/inevitable demise/imminent collapse of the Americanvehicle manufacturing industry. No more than a year later,that idea was no longer on the table- Ford, General Motors and Chrysler all proved to be profitable in 2010, yes, even through the year of economic doldrums – but that is not to imply that the auto industry was booming or that the economic downturn was over. It was not eagerness to buy new cars that saved the Detroit Big Three. The fact is that sooner or later we all need new cars. When the old car stops working, you need a new vehicle.
Or you need a used car.
So, even though there was pent-up demand, the revived auto industry didn’t roar back.
Out of the ashes of foreclosed homes, unemployment and a sense of hopelessness, arose a new set of values:
Frugality was and remains “in”. Now you hear everyone bragging to their friends about what a great deal they scored – how little you paid, not any longer how much you paid. People now take more time and more effort to search for the best bargain, to become a winner by paying less.
Playing it safe became a more important approach. Even with a so-called recovery, Unemployment remained high and jobs were not so secure. Sure, people are spending again, but there at a higher level of unemployment. A level that continues to stagnate. In other words, with jobs being less secure, more people are being careful about making too many big expenses and going too much into debt.
People became less inclined to take risks in times of uncertainty. Don’t forget what the recession was about – too many people spending too much more than they had. Taking out a new debt -let’s keep in mind that a car loan is a fairly big chunk of debt by most people’s standards- just hasn’t seemed as smart as it once did.
Biding time is also on the mind. Sooner or later, the economy is bound to rebound. They knew that the economy was bound to rebound, if they just waited long enough. People knew the recession would not last forever – that sooner or later bright economy times would reappear. When it does, we can all celebrate by making Detroit rich again. In the meantime, a previously owned will get us where we are heading, until we can afford to pay for a new car.
You’ll find this amusing, I’m sure. There were actually brief moments in 2010 when some used cars were selling at almost the same price as their newer counterparts. Demand for used cars made them scarcer than usual and drove up the price. Disinterest in new vehicles kept dealerships too well-stocked and kept new car prices fairly low.
Now it is time for some predictions(let’s see how many come true). Pent-up demand can only be fulfilled by buying used cars from other people for a while. Cars still do wear down and reach the age of retirement. One day, even they will have to be replaced. And even if they are replaced by newer used cars, those newer used cars won’t be available if nobody replaces the aging cars with new vehicles.
So, unless we do hit another fairly major downturn in the economy, let’s watch for the new car market to pick up steadily through 2011. A truly destructive recession could change that, of course, if enough people decide to go from two-car family to one car family. Or from three car family to two car family. Or if enough urban folks switch to transit to ride through the tougher times. However, as 2011 opens up, it seems unlikely this will happen.
Resources:
David Leonhardt is an Ottawa-area writer. This article about buying used and new cars was written for MonsterAuto.ca, a great place to buy your used car online.
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