They say that if the United States gets the flu, Mexico gets pneumonia. It is obviously a way of saying that what happens there will eventually happen here and probably in a more marked way. In the universe of cars, the main thing that happened -and is happening- in the northern neighbor was the recovery of the production and inventory of new cars and the beginning of the fall in the price of used cars as a result. We all know, when we see the neighbor cut his beards, we put ours to soak and if you are thinking of getting rid of your used vehicle, you will not get more money for it than at this moment.
Car prices began to rise during the pandemic, more markedly in the second half of 2020, when automakers sought to make up for lost time due to plant closures in April and May of that year. When this happened, they realized that the manufacturers of microprocessors no longer had the capacity to produce what they needed, because the electronics industry, driven by the “home office”, bought more microchips and more expensive, more advanced technology. The shortage of microprocessors, used mainly to control the engines, gearboxes and infotainment systems of cars, caused car production to fall to the point that in 2021 11 million fewer vehicles will be manufactured, producing losses for the automotive industry. estimated at 210 billion dollars. With fewer cars and more expensive raw materials, vehicle prices have skyrocketed and average U.S. transactions have risen above manufacturers’ maximum suggested prices, according to the Edmund’s website.
But this already began to change in the second half of 2022. Inventories grew little by little and the average price returned to be below the maximum suggested by the manufacturerswhich indicates that customers already had more weapons to negotiate.
During the absence of new cars, many sought used ones and this caused the prices of these to escalate as well. Fortunately the worst seems to be over.
What to expect this year
Mexico also experienced a similar phenomenon. Cars like the Suzuki Jimny were resold at a higher price than the brand’s agencies asked for a new one, and people who didn’t want to wait to be seen with the latest toy on the market, happily paid that premium.
In the United States, the time a used car waited in the yards of the lots or the second-hand departments of the agencies was 30 days until August of last year, but it already reached 45 days in November. Used prices fell about 3% in the last quarter of 2022 and it is expected to drop between 10 and 20% during this year that we are living.
In fact, JD Power calculates that the price of new cars will drop this 2023 around 5%. Hardly this decrease appears in the published price – something that happened in Mexico with Mazda 2 and Mazda 3 – but it does in the form of promotions such as months without interest, free insurance or bonuses for one or another sales model that is not so demanded.
Inventories are also beginning to normalize locally, although more slowly. China-made ones are easier to find, and brands like Chirey, Changan, MG, and Jac have taken advantage of these tailwinds. Even General Motors, which has 60% of its sales of products originating in that country.
This normalization is gradual, but it must be maintained and with it, used cars have already begun to drop in prices on national soil as well.. If you’re thinking of selling one, now’s the best time, but consider that the new car you want may not be available, so considering alternatives, even outside of traditional brands, can be a smart move. If you are one of the few for whom the sale of your car is not tied to the purchase of a new one, you should definitely sell now. To do so, consider selling online, as well as in agencies. For security, it is no longer recommended to give the address of your home or business to make the transaction between individuals, since although it seems financially attractive, the risk is too high.
Do your math and make your decision, postponing it, for some, it may be too late.
