— Road & Track (@RoadandTrack) June 9, 2021
Online car sellers Carvana and Vroom have automatic apps through which you can get an offer on your used car, whether you’re serious about selling it or not. Some of those offers have gone viral because people cannot believe how much some cars are worth to them, more than the car was purchased for, and sometimes more than the price of a new model!
The strangeness is most visible on social media, where it’s easy to find reports of online-only retailers like Carvana and Vroom offering stratospheric buyout prices for everyday used cars. Often prices for extra-hot used vehicles, like the Jeep Wrangler and Toyota Tacoma, approach or exceed the suggested retail price for their new counterparts. Clearly, one might naturally assume, someone is losing money here. “Disrupting” the market by burning investor cash is a classic Silicon Valley play, one that defined the rise of Uber. It wouldn’t be surprising to see online retailers using COVID-19-related market shifts and piles of VC money to gobble up market share while taking substantial losses.
Yet that’s not what’s happening. It may defy surface-level logic and stun onlookers, but the trade-in values and used car prices at online retailers aren’t outliers.
“The market is absolutely on fire,” Jonathan Banks, J.D. Power vice president and general manager of vehicle valuations, told Road & Track. “Dealers are going to pay you perhaps even more, depending on where you’re at. Especially if you have a Tacoma. Gosh, if you have a Tacoma it’s like a gold mine. Your Tacoma, your Wrangler, your F-150, dealers are going to pay you top-dollar price as well. So this is not a Carvana phenomenon.”
What’s behind these crazy prices? You guessed it: a shortage of new cars. The reasons are a combination of what happened to toilet paper last year and what happened to real estate this year. Read about the factors feeding a red-hot used car market at Road and Track. -via Digg
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