The price of used cars soared during the COVID-19 pandemic, but two Columbia car dealership owners say the demand could be leveling out.
The used car buying market boomed due to slowed production because of the pandemic, resulting in a national shortage of new manufactured cars, according to a New York Times article. People turned to used car dealerships to avoid the price increases that came from a low supply of new models.
This national trend has affected local dealerships such as Ashland Auto Sales and World Auto Financial, according to the dealerships’ owners.
Based on recent data from Ashland Auto Sales, the number of pre-owned cars sold was 13.8% lower in 2022 compared to the previous year. Specifically, the dealership sold 422 used cars in total, a decrease from 490 in 2021, Mohammed Diab, the owner of Ashland Auto Sales, said.
Diab said this can be attributed to banks raising interest rates, making it more difficult for customers to receive loans to purchase vehicles.
During the pandemic, Diab said used car prices dramatically increased as a result of the lack of new cars being produced and sold.
“Naturally, when you don’t have new cars coming in, then the used car value is going to rise, and it did,” Diab said. “It went through the roof.”
Now, automakers are back in business. New cars have started to trickle back into the market, which will likely result in a price drop for pre-owned vehicles, Diab said.
Izz-aldin Mustafa, owner of World Auto Financial, said he has also noticed the trend. He said he has noticed that prices have already begun to decrease.
“In the last six months, prices have started to normalize to what they could have been pre-COVID,” Mustafa said.
Other dealerships around Columbia declined to comment or release sales data.