GRAND RAPIDS, Mich. — Used cars are actually more valuable now than they were about four to five months ago, in a surprising outcome of the COVID-19 pandemic.
The car in your driveway could be worth as much as 15% more now than it was just a few months back.
“It’s a pretty big jump,” Paul Isley with Grand Valley's business school said.
According to Paul Isley with the College of Business at GVSU, this is an unexpected outcome of a dramatic drop in car sales.
“The number of new cars being sold dropped quite a bit. We had more than a million fewer car sales then,” Isley said.
Dealerships closed due to COVID, which meant fewer used vehicles were traded in.
“What we saw was a decrease in the ability for dealers to buy used cars. At the same time we had a lot of stimulus money come out..that resulted in a really big bump in personal income,”
Because of this increased demand due to more money being in people's pockets, the used car market saw a big increase in value due to scarcity. That scarcity added value, and possibly more crime seen at used car lots, like those seen in Grand Rapids last week.
“I can’t predict theft. But I can say as things go up in value, they become a more appealing target to crime,” Isley said.
The price bubble won't last long. Isley says they predict the economy will weaken in coming months because of stimulus money ending. More trade-ins are also happening as dealerships open back up.