If there’s one question we’ve been getting over the past few years,  it is, “what in the world is going on in the used car business”?

We’ve been around the used car business for a long time, decades in fact and have never seen anything like the inflation that we’ve experienced in recent years. Most people experience massive sticker shock when they need a car now and the last one they bought was 5+ years ago. 

First, we all know and have experienced inflation happening over all kinds of products, everything from milk and eggs to homes to lumber to raw materials like plastic, for all kinds of things

There’s a million reasons for this inflation but generally speaking once prices inflate and people pay those prices, they tend to stay there and stabilize. 

Additionally, in the car market, the off lease market has disappeared. Those vehicles were a large supply source for us and other dealerships for decades and now it’s wiped out, so supply is low. Everyone is buying out their leases now because car values have gone up so much. 

So for example, if someone leased a Toyota perhaps, 3 years ago, Toyota predicted that car was worth $12,000, and gave a buyout number to the lessee of $15,000, but 3 years later that car is actually worth $20,000! So, the majority of people are buying out their leases now, which didn’t used to happen. For us and other dealerships that means an entire source of quality vehicles has been wiped out, creating this huge lack of supply for low mileage used cars. Combine that with the demand issue and all of a sudden dealers are trying to figure out how to respond to this?

Most car dealers are not really great about properly reconditioning cars but now imagine that you can’t buy low mile cars, and the labor and part costs have increased. 

Now you’ve got low mile cars being gone and higher mileage cars not being properly reconditioned, so you got low supply and high demand which doesn’t take a phd in economics to realize is going to mean high price.s

So the question is what to do about it…

We think it’s a three prong strategy.

But first, here’s what not to do!

The response that we hear more than any other is I’m going to wait it out or look on my own. And you are certainly more than welcome to try!  We’ve been hearing that response from people for the past few years. And a lot of those folks are absolutely kicking themselves for not buying a car six months ago or a couple years ago, because the prices now are significantly higher than they were six months ago, even though six months before they were even lower. So every indicator that we see says we’re going in the wrong direction and that the prices are going to continue to rise. 

What can you do in this unparalleled market?

The way we believe people should respond starts with FLEXIBIITY!

Your car search should be as flexible as possible, which means flexible on brand, flexible on mileage,  flexible on model and year, flexible on features flexible on color, flexible on budget. Whatever the parameters that you were thinking about using and going into your car search, trymto expand as many of them as will still get you the car that will work well for you and your family. We can’t stress this enough. The more flexible you are, the better shot you have at getting a GOOD CONDITION vehicle that will serve you well for years to come. Holding out for a specific color or year, could get you what you want on the surface, but may not be a car that lasts as long as you hope because the condition is poor.

The car market is functioning a lot more like the housing market has over the past few years so MOVE QUICKLY.

People are used to doing this with houses, right?  If you see a house you really like and you think about it for two days it’s gone. Somebody else will have put an offer on that house that is accepted and it will go pending immediately.  The GOOD cars are no different right now. We reject 90% of the cars we come across because of poor condition. But the quality cars are moving at a speed that is uncharacteristic for the car business and much more like the housing market. And I get it! Buying a car is a big decision, much like a house. But when you find what you want or hopefully when a MATS staff helps you find what you want, move quickly and purchase the vehicle. Don’t delay.

And finally, this is a strategy that we have been talking about at mats over the past 5-6 years and it works. Buy a vehicle with higher mileage than you think you want. Ignore that old school less than a 100,000 mile “rule”. That no longer applies.

Older cars with lower miles is where you run into quality issues but going newer with higher miles means you’re going to get better quality than you think because the cars are lasting so much longer than they used to. And you are going to buy into the lower, slower depreciation curve. We have people all the time say hey i kind of like the idea but i’m concerned about the risk. We hear you. The best response to that is instead of buying low miles to lower your risk and paying more money than what we think the car is worth, go higher miles and buy an extended warranty.

You can literally save $5,000-6,000 by going with a car that’s the same exact car with maybe 60,000- 70,000 more miles on it, Then spend $2,200 on a warranty that protects you for an additional 5 years and 100,000 more miles.Y ou end up saving $3,000-4,000 thousand dollars and getting a warranty that will last several years. This strategy has been a game changer for many of our customers.

We would love to help with this. If you have any questions, feel free to reach out to our MATS staff or fill out the contact us form on our website. We’ve been helping people buy used cars for decades, so we feel like we’re experts in helping navigate people through what is traditionally a really confusing process and right now is even more confusing.