If you’re in the market for a used car, truck or SUV in 2022, it won’t surprise you that vehicle inventories are low and prices are high. Unlike the last vehicle supply crisis during the Great Recession, demand for cars hasn’t dropped just because they’re hard to find. In fact, some of the vehicles on our recent Best Used Cars Under $10,000 list were retailing for half that amount in early 2021.
With too many buyers looking at too few vehicles, it’s more important than ever to be a savvy consumer, which means knowing the terrain, where to buy, what questions to ask vehicle sellers, and how to inspect your potential new ride.
Most of the important things to note haven’t changed in years, even as vehicles have evolved, but the abnormal trajectory of used car values is a very recent phenomenon.
Why are the prices so high?
When Covid-19 crippled the nation’s economy in 2020, many automakers canceled orders for the semiconductor chips used for everything from car radios and engine management systems to chipped car keys. They took this step out of fear that the virus would drastically reduce vehicle sales and they would be stuck with excess chips.
It turns out that the opposite was true.
As a result, automakers don’t have the chips needed to meet the high demand for new cars, and most are struggling to keep up with production. With popular models like the Kia Telluride and Ford Bronco essentially out of stock due to high demand, Americans literally shifted gears and started buying used cars in droves.
According to auto industry analyst firm Cox Automotive, 40.9 million used cars were sold in the U.S. in 2021, up 10 percent from 2020 figures. That figure included 22.2 million of sales of consumers to dealers and online retailers like Shift and Carvana. Used car sales are expected to remain high this year, with Cox predicting numbers for 2022 at 39.3 million used vehicle sales, with 22.1 million consumers selling to dealers and online retailers.
Those numbers should continue to drop as new vehicle production continues to improve. For now, though, some very popular models (like the Toyota Tacoma) are selling more used than new before the chip shortage/coronavirus crisis.
Don’t abandon ship!
Yes, used vehicles of all kinds cost more than they did two years ago, but you can still get great deals if you do your homework and are ready to buy when a solid buying opportunity presents itself. Follow these steps to get the best deal:
Know what you want to buy and be realistic about how much you want to spend. Remember, used vehicle prices typically go up 10 percent, but some models can be even higher than that. The $25,000 Jeep you want to buy is now worth $27,500 or more, and it may or may not be worth stretching for that purchase.
Consider Certified Pre-Owned (CPO) vehicles. Vehicles that qualify for manufacturer CPO programs are often the best of the best. These are typically low mileage return lease cars with all their routine maintenance taken care of, and CPO programs typically offer excellent warranties.
In some cases, CPO vehicles may even have higher coverage than newer vehicles of the same make in the same showroom. In 2018, I helped a relative purchase a Certified Pre-Owned 2017 Lexus NX. The vehicle was a low-mileage demo unit for only a few months, but because Lexus’ CPO program added two years to the factory warranty, it came with a longer factory warranty than a new 2018 NX at the time.
Choose a trusted brand. It only takes a few keystrokes to find out if the vehicle you’re looking for has a good reliability record. When shopping for luxury vehicles, remember that the cost of service and maintenance will be much higher than those of popular brands. It costs more to maintain a Lexus than a Toyota, even though that Lexus is made with Toyota parts. In general, the more features a vehicle has, the more expensive it will be to repair if it breaks down.
ask the right questions
When it’s time to buy and start driving cars, you’ll want to learn as much as you can about the specific vehicle you’re looking for. The following questions are all required:
- Do you have service/maintenance records for the car?
- How many owners has it had?
- Does the vehicle have a clean title (watch out for salvage, includes flooded cars and rebuilt titles)? Paying for a service that checks title status and may have service record listings like CarFax is a smart expense.
- Where was the vehicle driving or where did it come from? This is a very important question to ask as vehicles from saltwater climate areas like Florida and winter climates where heavy road salting can be prone to moderate to severe rusting.
- Does the vehicle come with warranty? How much is left of that guarantee? If you’re at a dealer, can you buy an extended warranty?
- Is there a customer satisfaction return window? How long?
- How many keys come with the vehicle? Remember, during a microchip shortage, it can be difficult to get extra keys, even for used cars.
- Are the owner’s manuals in the car? Check it out and make sure for yourself. Owner’s manuals are your car’s “bible” and provide all the information you need on how to properly operate your vehicle and when to service it. If you buy from a dealer and the car you want to buy doesn’t have manuals, get a free new set of manuals as part of the deal.
- Are the spare tire and lifting tools present and in good condition?
- Does the vehicle have floor mats? On used vehicles, these are often stored in the trunk/hatch area to keep them clean for the new buyer.
Become a vehicle inspector
Once you have the answers to your questions, it’s time to take a closer look at the merchandise.
Check for rust. Rust is rarer than it was 30 years ago, but it still happens. Get down on your knees and take a look at the bottom with a flashlight. Inspect the lower areas of the door and fender for paint bubbles that indicate rust. Lift trunk/hatch area and passenger cabin carpets and look for rust or flood damage.
Look at the ground and the oily bits. Use your eyes and a flashlight to look under the car for leaks, which could indicate the need for expensive engine, transmission, or differential service. Check the underside of the vehicle and the ground under the vehicle for leaks.
Take a leisurely walk. During the test drive, leave the stereo system off and listen to the vehicle. Don’t just drive around the corner, experience the vehicle at city and highway speeds. Purposely drive on a bumpy road and pay attention to squeaks and rattles. Use your nose to sniff out bad odors that may indicate engine or transmission damage, an exhaust leak, or even musty odors that could indicate a car flood or a windshield, sunroof, or trunk seal leak .
Drive straight. Check to make sure your potential purchase follows a straight line. Take someone with you during the test drive, or ask your dealer or car owner to drive straight ahead. If the vehicle is going straight, but appears to be pulling away at an angle, this “crab walking” phenomenon could indicate serious body or suspension damage. Look at all the tires to see if they have uneven wear or low tread.
If you don’t feel comfortable getting dirty or think you don’t know enough to really look at the vehicle, get a mechanical inspection. We always recommend a pre-purchase inspection, and hopefully in 2022, services like Wrench Mobile Mechanics and RepairSmith offer mechanics who come to you or the vehicle for such services. You may end up spending $250 on such services, but it’s worth it for a little extra peace of mind.
Create a checklist
Don’t expect to remember all the tips in this article if you’re new to the car-buying process. Create a checklist with questions and items to look for as described above. If you have your own methods for checking things, write them down so you don’t forget them!
Vehicle shopping can get emotional if you find a car that you really want or have been waiting to buy for quite some time.
Be sensible and systematic, ask the right questions, and enjoy your used car purchase!
Leave a comment