How to Navigate the Car Market During the Pandemic

You don't need an economics degree to know that high demand combined with low supplies equals rising prices. Shoppers in the used market often gravitate toward the so-called off-lease cars, typically turned in after three-year leases, or certified pre-owned models that are low-mileage, late-model cars. The certified used cars typically come with warranties and other extras that you don't get on most used cars.

"Used vehicles were sitting almost untouched at the start of the pandemic. And now they're practically flying off dealer lots,” says Jessica Caldwell, executive director of insights at car-research site Edmunds.com in Santa Monica, California.

The pandemic caused economic uncertainty at the least and direct economic problems at its worst. Thus many potential new-car buyers switched to used vehicles to save money, especially to those off-lease or certified pre-owned models, draining that pool.

"I found the sweet spot to be in the four- to five-year-old range,” Preston says. “I was looking at 2017 models closer to 20 grand, so I started looking at 2015s and they were closer to 15 grand. I thought, Wow."

Because older cars come with more uncertainty than newer ones, Preston suggests checking a credible guide, such as what his publication offers, that uses data to forecast which cars will be reliable as they age.

A possible silver lining: Dealers are willing to pay more to acquire inventory to meet the surge in demand for used cars. That's great news for car owners.

They “can expect to get a higher value for their vehicle if they sell or trade right now,” Caldwell says. “But time is of the essence because there's no guarantee that these unique market conditions will continue for long."

So if you no longer need your car, now could be a great time to cash in on higher prices by selling. Or if you do find an elusive sweetheart deal on a new or used car, your trade-in should be more valuable than normal.

Look for leftovers

You might be able to find never-sold 2019s, some identical to the “new” 2020 versions on sale now. According to a new analysis for AARP by iSeeCars.com, 1.9 percent of all vehicles remaining at dealerships are 2019 models. But some models have a greater supply of leftover 2019s, so it might be worth beating the bushes to find if they meet your needs.

The Dodge Grand Caravan and Journey are being discontinued. 2019 models of the Genesis G70, Ram 1500 Classic and Buick Encore, which have 2021 versions in showrooms now, are considered two years old, which can trigger increased incentives from automakers.

Explore quick turnovers

Only 3.4 percent of cars bought new are sold within the first year, according to iSeeCars. But some, often luxury models, get dumped at much higher rates, in one case as many as 1 of every 8 sold.

The original owner takes the big hit on depreciation, and you get a shot at a nearly new vehicle. Some companies give dealers incentives to buy such cars, use them as service loaners, then sell them again even before they become the previous year's models — mainly Mercedes-Benz and BMW, according to iSeeCars. The company considered those unrepresentative and tried to weed them out of its statistics. To you, they're still nearly new vehicles and potentially worth considering.

You should ask why a car so new is becoming a trade-in. You'll find lots of reasons. Sometimes owners decide they really weren't the vehicles that they had expected. Or they got a foretaste of iffy reliability and learned quickly about high service costs. Sometimes, for those who can afford such impulses, buyers just want the newest shiny thing.

Make a switch

When your preferred vehicle isn't available at a price you want to pay, look for alternatives, ones you didn't have on your original list. The point is to wind up with something similar to what you wanted but that you can find in greater supply on dealer lots.

Sometimes that's another vehicle from the same brand. Other times it's a direct competitor. It might even be a similar type of vehicle but a different size.

TrueCar researchers found these examples of how its users were looking at substitutions: Those who wanted a Kia Telluride considered a Toyota Highlander, Kia Sorento or Ford Explorer. If they were looking for a Toyota Tacoma, they also looked at a Ford Ranger or Ford F-150. Potential Toyota RAV4 owners widened their scope to a Honda CR-V, Mazda CX-5 or Subaru Outback.