HUNSTVILLE, Al. — The pandemic has created unprecedented circumstances in so many aspects of our lives, and the used car market is no different.
“It's crazy,” said Richard Hughes, owner of Richard Hughes Auto Sales in Huntsville, Alabama. “It's so hard to get vehicles, and people are waiting to buy anyway. So, a lot of times we never put them on the lot.”
Hughes started in the business before he could drive.
“I’d always, in the summertime, pump gas for my dad,” he said.
Decades later, he started his own used car dealership.
“This year will be 35 years. It's been a family business the whole time.”
Now, his family business is changing.
“We always liked to look at somebody when we sold them a car or shake their hand or something like that. That's a thing of the past.”
The pandemic has done to car buying what it’s done to almost everything: online interactions have replaced human interactions.
That’s created one complication for Hughes and other dealers, but the biggest issue came when supply chain problems caused a global micro-chip shortage. There are no new cars coming out, so used cars are in demand like never before.
“There's just not the inventory for anybody,” said Hughes. “If you could have the merchandise to sell, it sells itself.”
Hughes now sits online every day to buy cars on online auctions.
“It's easy to bid on 20 cars and only get two or three of them, especially on the work vehicles, vans and trucks, because everybody wants the same thing and they're just not very many out there,” he said.
Then, when he can buy a car, he’s paying a lot more than he used to. Used cars prices are up more than 30% over this time last year.
“So many people's lifestyles changed, they decided to stop taking public transportation or using Uber,” explained Karl Brauer, a car market analyst for ISeeCars.com.
Brauer said with fewer cars out there and more people needing them, consumers should wait to buy a car if they can.
“Both sides of that curve are moving in the wrong direction to keep prices down. There's really no indication that it's going to shift dramatically back to normal pricing anytime soon,” said Brauer.
The record prices are attracting attention. For the first time, Wall Street traders and other economists are looking to the used car market for how the economy could be in the months to come.
“Used car prices are an element that people do consider for inflation,” said Brauer. “And so, if that's what you're looking at, it's indicating pretty substantial inflation.”
The used car market has also reflected pricing changes sooner than some other ways we measure the economy—like the Consumer Price Index that measures prices of goods and food.
“Car sales and prices are all very commonly tied to the larger economic activity, and if we can get the chips back and get the volumes up to where the demand is for these vehicles, it'll be definitely a big component that will boost the overall global economy,” said Brauer.
Waiting for that boost has Hughes considering a tough choice.
“You have to change with the times, and I'm having a hard time with that part of it,” he said.
Despite more and more technology taking over his business, he doesn’t want to quit. Hughes said is going to hold on for as long as he can, hoping one day, there will be more than empty spaces outside his office.
