During the Pandemic, multiple consumers were purchasing used-cars because of the shortage in supplies for the automobile companies. This caused consumers to go to used-car lots because the new car dealers had nothing to give. Companies like Carvana have been hit hard by this issue. While they were thriving in 2020-2021 due to their online purchasing of used cars, it has not been needed now because of COVID protocols going away.
Since interest rates are getting to be so high, consumers have been purchasing fewer cars. This is killing the used-car business as the new-car dealers have been able to pick up their production. In this article, the said the used-car values fell 14 percent in 2022, and are expected to fall 4 more percent in 2023.
The most struggling business in the car selling industry is Carvana. They have lost over 500 million dollars and have had to lay off 4,000 employees already. Their stock has fallen more than 95 percent, and they are starting to pile up debt. Though they are struggling, there has been plenty of research showing they can turn themselves around later this year.
https://www.nytimes.com/2023/01/30/business/economy/used-cars-carmax-carvana.html
The used-car boom was interesting to follow because my Dad works with newer cars and he told me all about it. He would come home early some days because they had nothing to do, no cars to sell and no customers to work with. Although it's a negative impact there are some positives to it. Used cars were very cheap everywhere you looked and not only that but motorcycles. This allowed me to invest in an additional one over the summer in hopes of fixing anf re-selling it.
ReplyDeleteIts crazy to think about how a thriving business like Carvana is just cut at the knees by covid and is now fighting for its life. I wonder with all the new car production if we will see a turnover in 5-10 years when those cars become used.
ReplyDeleteIt is wild how quickly prices are rising in this specific industry the cost for a super bowl ad has gone up from $5.2 mil in 2019 to, as mentioned, $7 mil. In 4 years, there has been a $1.8 million increase in the average cost.
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