The pandemic has also hit the used car market: a used model with few kilometers is worth gold

Buying a used car has always been interesting because it offers the possibility of choosing the desired model at an attractive price. When it comes to fast-growing five- to seven-year-old cars, that was true before the coronavirus pandemic hit. Such a choice seems tempting even now, but finding a nice model with a higher configuration in Lithuania is becoming a difficult mission and prices continue to rise.

New car manufacturers and sellers sensed the market changes even earlier. During the first wave of the pandemic, sales volumes in many regions saw record drops. After the introduction of quarantine in Europe, new car sales fell by 80%.

Even the Chinese market, which until then had been characterized by a great appetite, shrank by 70%. Assembly lines were stopped, workers were laid off, and the outlook for the transportation sector looked bleak.

The pandemic has also hit the used car market: a used model with few kilometers is worth gold

As quarantine restrictions are eased around the world and manufacturers adapt to working in new conditions, the automotive industry has returned to its normal pace in the second half of 2020, but so far supply has not been able to keep up with growing demand.

This was also influenced by the crisis in the supply of microprocessors, without which new cars are unimaginable. With very few new models hitting the streets around the world for any length of time, the same problem has hit the used car market like a tsunami.

When there are not enough new ones, there is also a shortage of used ones

Augustina Černiauskaitė, head of used car business development in Lithuania at Inchcape Lietuva, confirms that the company has felt the impact of the coronavirus pandemic particularly strongly. Two years ago, Inchcape certified warehouses always had around 200 cars ready for sale and it was easy to buy another 40 or 50 if needed. Unfortunately, this luxury has long disappeared and it is becoming increasingly difficult for dealers to guarantee the supply of used cars.

“Used cars must still be technically valid in order to provide a guarantee in the event of a sale. Cars with a questionable maintenance or repair history are not suitable,” says the interviewer.

According to A. Černiauskaitė, to gain customers’ trust, we try to provide them with as much information as possible about the offered vehicle. Cars are thoroughly checked in the service, and partner services are also used when searching for information by body number. One of them is the international company “AutoDNA”, whose geography of activity covers all of Europe.

However, there is a shortage of pristine used vehicles with a complete maintenance history. According to the interlocutor, the reason for this is a closed cycle of product handling. There aren’t as many new cars on the market that consumers need, or they can’t get the models they want, so they drive the ones they’ve had the longest.

“The USA has also closed: we no longer receive as many vehicles from here as before. Of course, the demand for used cars, which are usually sold after leasing contracts have expired, has increased significantly. This is evident not only here, but also throughout Europe, and the most important thing is that with the increase in demand, prices have also increased significantly,” notes the company representative.

With an additional guarantee: no unexpected costs

A. Černiauskaitė says that due to the limited supply there are even curious cases when in 2017 the car produced now costs the same as it cost the first buyer. According to the interlocutor, fewer consumers now choose pre-assembled new vehicles, since their equipment is often very modest.

“Up to five years ago, cars were better equipped, so if you can find one for sale now, especially in good technical condition and with low mileage, it is a golden find. The real hunt for good used cars has begun,” says the head of used car business development.

The flow of used cars, placed on the market after being used in companies, has also decreased. The most frequent cases are when companies extend leasing contracts for a further year or two.

A. Černiauskaitė emphasizes that when purchasing a used car from an official dealer, not only the 6 months or 20,000 years provided by civil law apply. mileage warranty, but it is also possible to purchase an additional warranty for a fee.

“The options are huge: you can insure both individual units and the entire car. It pays off very well, because high-quality technical maintenance is guaranteed at the service, and services can be chosen for the desired period. For example, after the manufacturer’s warranty expires, such an additional service allows you to reduce the risk of additional costs,” explains the interviewer.

Not only the intentions differ, but also the ability to take care of the customer

Replacing your engine after your new car warranty expires can save you 10,000 to 20,000. euros, and no manufacturer protects customers from these costs without choosing an additional service. Even if you don’t count serious breakdowns, if you use a car that isn’t new, the entire annual cost of the additional warranty can be amortized in just a few maintenance jobs.

A. Černiauskaitė adds that only the largest companies cooperating with all banks and insurance companies can reasonably guarantee the quality of customer service.

“The most important question is: What should be done if something happens to the car after purchase? What can you expect, for example, from a dealer on the market? In some cases, if the vehicle breaks down, I can also go directly to the manufacturer and get a so-called ‘goodwill’ guarantee or, if something really happened without one of our specialists noticing, I can admit the mistake and compensate for the loss,” notes the interviewer.