Trying to buy a used car in recent memory has been a nightmare. Problems began to arise during the pandemic. A mix between microchip shortages, supply chain mishaps and manufacturing woes, the used car market seemed like a good place to turn. As demand grew, prices soared, however.
“The used car market completely changed in the last year,” Stuart Kramer, a finance director at KIA Motors in Dallas, said. He wasn’t the first to notice a big change. Scott Zaff, a used car director at Chrysler, Ford, and Dodge in Irving said, “Not in 20 years of being in this business have I seen anything like this.”
Customers noticed the difference as well during the buying process. “It sure has been an issue for my family,” Misty Williams, the potential buyer of a Jeep Grand Cherokee, said. Leaving the dealership not finding what she wanted she said, “It’s tiring, the runaround, spending all day here on my day off, I’m just over it.” She was holding her 5-month-old daughter Sarah, with Lauren who is 4, and Emma, 6, behind her. Her husband, an electrician, had work this Saturday filling in after a recent layoff at his company. Normally, they share this day off together with their children. All day, they had been meeting over FaceTime when he was available to discuss the deal. Misty’s 2003 Kia Sorento needed a new transmission, and they couldn’t afford the costly repairs and with the high mileage they didn’t think it was a good investment. Her husband, Greg, has a work truck he’s been using the last four years. Hoping to trade her vehicle in for a portion of a downpayment and be able to finance a cheaper, used vehicle was their hope. Misty is a forklift driver at a large Amazon Warehouse. She works second shift so she can take the kids to school in the morning and Greg picks them up when he gets off. They have both been looking for an affordable car for over a month. “I really don’t know what to do anymore.” Misty has been using Uber to get by, spending her days off at local dealerships. Doing further research, it seems some potential buyers are even holding out.
One of the factors keeping paying customers waiting is the current interest rates. As fear grows of another recession, many looking for used vehicles are holding out. According to Cox Automotive (www.coxautoinc.com) the total number of used car sales in January were estimated to be down by 2.8 million units. That’s a drop of 8 percent from this time last year. Vehicles sold at traditional dealerships are estimated to be down 1.5 million, 7.5 percent from that of January 2022. CarGurus.com gives consumers the ability to track prices themselves with online graphing tools. According to their data, from August of 2022 prices have gone down, but not everyone is seeing differences at the dealership.
“Until the manufacturers can create enough inventory to even out the used car inventory, it will just keep getting worse,” Stuart Kramer said. Around October and November of last year he noticed a drastic change in his market and interest rates began climbing. New cars are becoming more available. However, due to chip shortages, it’s mostly only base models. The new cars don’t seem to have the same quality as they did three years ago because manufacturers are having to skip steps. To give an example, he said a truck of new vehicles were delivered to the lot with buttons for heated seats but the heating element in the seats was missing.
“The quality of even the raw materials has gone down,” Scott Zaff said. He said customers are seemingly putting more value into used cars with low miles, but banks are responding with high interest rates, making it a tough sell. He said that currently, working hours have increased. “We don’t have days off anymore. We work open to close, every day. We open at 9 in the morning and don’t get off until we close, but deals are still working then. Customers will come in at 8:45 at night wanting to buy. Monday through Saturday. I can’t remember the last time I didn’t get off before at least 10.” He seemed exhausted. “The money isn’t what it used to be, the bonuses aren’t achievable, people come and go so fast I don’t know who is who anymore.” He went on to detail accounts of recent employee firings and the anger of those who recently started feel. “They come in wanting to get paid. We don’t get paid hourly, it’s all commission. You come here off the streets ready to put in some hard hours? You won’t get paid. The structure of the deals has changed, commission has changed, inventory and sales are gone. We had a meeting last week with a higher-up from Ford and got our first shipment of new vehicles in three months. Used cars? The problem with me is new cars. It’s all the same, if one doesn’t work they all don’t work.”
Stuart Kramer found himself with similar problems. “The hope is that the manufacturers are going to be able to build enough inventory to where buyers will have new vehicles available in order to level out the market,” he said. “The way it works is that the interest rates for cars now are only guaranteed for 15 days. If I quote a loan, sometimes the numbers change after 5 days. That’s all some of the banks give us now. Customers come back after talking to their families or whatever and make a decision. And yeah, they’re expecting the same deal we had. That’s gone. Everyone starts over. You know what that’s like? If one of my salesmen doesn’t submit paperwork the day a deal is done, the bank might reject it while the customer is driving around in their new car. I pay for that. We pay for that. That’s out of our pocket. The used car market might not level out until the end of the year or early next year. Dealerships are still depleted of a new car inventory, leading to the problems we have today.”
While the used car market seems to slowly be on the uptick as new vehicles are beginning to get delivered, this isn’t the good news many have been waiting for. Experts in the field are beginning to see a change but it won’t come to all until the effects of the pandemic are sorted and the economy settles.