The used car market has undergone important changes in the last three years due to economic factors and current situations. that had an impact on the increase in its price, but precisely because they are specific moments in the economy, these days it returns to resume its ‘normality’.
To understand it, you have to go back to April 2020, which was the breaking point for this business that moved an average of 1,200,000 transfers each year.
That month, when the isolation due to covid-19 was recently decreed, only 44 transfers were registered, and the year finally closed with just 722,977, when in 2019 there were 1,282,350 ‘changes’ of ownership.
The pandemic affected global automobile production and distribution due to plant closures, and ensuing setbacks such as microprocessor shortages and the container crisis, resulting in a decline in the availability of new models.
Prices in factories and transport logistics also rose considerably.
This situation unleashed the used boom. As there was no stock of new ones and fearing contagion on public transport, many buyers opted for used cars as an alternative, a fact that almost immediately caused the transfer figures to return in 2021 to pre-pandemic figures. That year, 1,134,236 were processed in Colombia.
(You can read: Fitch maintains Colombia’s rating at BB+ with a stable economic outlook).
With no stock of new ones and fearing contagion on public transport, many buyers opted for used cars as an alternative.
And the year 2022 would arrive with its economic fluctuations due to the escalation of the dollar. The country came from having an average price of the American currency of 3,400 pesos in 2020, 3,900 pesos in 2021 and last year it closed above 4,800 pesos, which put the price of zero kilometers through the roof. That year, 262,565 new units were sold, which represented an increase of 4.8 percent compared to 2021.
This, added to the increase in inflation and the increases in interest rates, bank models have scared away the clientele in these months when the presence of new ones in the showcases was already beginning to normalize. That bullish phenomenon in the prices of the new dragged the used car.
But this is a trend that hides other realities that force other accounts. Although in pesos it may give the impression that there is a ‘profit’, the reality is that many sellers do not take into account the high depreciation of the Colombian currency. In other words, with the money he bought four years ago he did not buy the same car today.
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And the speculation that there was on the part of some sellers who could take advantage of the situation also plays a role.
Today what is seen is the ‘deflation’ of that speculation that, for reasons of supply and demand, puts cars back on their money.
This is reflected not only in the drop in sales of new cars this year, which affects used cars because most of the latter are retakes, that is, the old car is part payment. This phenomenon began a verse last year, when barely 440,003 transfers were processed.
With speculation or that used ‘bubble’, what is happening is that since they were not sold at their inflated price, now they are going down. The prices are what they are, because another reality is that one is the value that the owner puts on the used sales portals and another is the price at the time of writing the check, or giving it as part of payment.
The fact that some used cars ‘drop’ in price – as some media have published – is also due to the fact that there is a large stock of certain cars that are more popular, which makes it unprofitable for buying and selling businesses. having them for so long in their showcases waiting for buyers.
Whether for new or used cars, the market in Colombia offers different plans that fit the budgets of buyers.
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Of course, the cheapest new cars have the largest population and, therefore, there are more second-hand parts businesses and a larger target mass of buyers who, in turn, given the greater offer, can choose and haggle for more realistic prices. and sometimes very far from the speculative of the bidders.
You also have to look at the impact on the price of used cars in the medium and high ranges, where depreciation marks the hardest and they are punished more strongly in the retake or in the purchases, they need to rotate them quickly due to their weight in the value of the inventory. Hence, a used car of what is called ‘high-end’ can be proportionally cheaper, whose attributes are diluted more quickly when they are resold.
It should also be noted that the difficulties experienced by the sales of new ones are transferred to used ones due to the financing costs that make it more difficult for them to change owners when there are credits involved or apprehensions about the economic outlook of families. and the companies.
This leads to a drop in demand that also lowers the prices of the entire market.
As of May of this year, the number of transfers was 366,080, very close to the 440,003 that were registered in the first five months of 2022, that is, there is a recovery with more landed prices that will surely level off in the second semester. of this year until returning in the future to the averages before 2020.
Drafting Vehicles
