It doesn’t matter if your love for cars is in posters, motorsports, or Hot Wheels. Sooner or later, you’d want the real thing – a real car to wrench and tweak to your heart’s content. Sadly, that goal seems to be moving further away thanks to today’s high used car prices.
Long-time visitors to this site would know that we have been down this line of thought before. Prices for desirable classics have only gone to the moon. Not only that, those price inflations are spreading to other “future collectibles” as “investors” look for potential elsewhere.
Nowadays, it isn’t the collectible end of the market that is copping those gains. People are paying more for anything with a running engine and no rust.
There are plenty of stories of owners selling their plain daily driver cars for more than they bought them for. Buyers throwing offers sight unseen for something as common as a used Toyota. You would think that money has lost all meaning and that cars are a new gold standard currency. How did we get here?
What is causing high used car prices?
You can thank the COVID-19 pandemic for kicking off the domino effect. As workers stayed home and factories shut down, production lines stalled. Then transport companies stood down their drivers, further breaking the fragile just-in-time supply chain. And now, Russia’s adventure in Ukraine is cutting off the supply of vital raw materials needed in automotive production.
As part supplies ceased, production lines were put on hold time and time again. This dries up the supply of new cars, just as buyer demand ramps up. In nearly every country that depends on imported vehicles, dealers are struggling to meet demand. Imagine waiting a whole year just to get your hands on something as ordinary as a Toyota RAV4 family SUV. That is a reality in some markets.
These shortages in the new car market are causing a trickle-down effect on the used car market. As supply for new car options dries up, buyers are turning to used cars and driving up prices. Forget the big figures that circulate the rarefied classic car market. Even the normal used car market is going absolutely bananas.
While high used car prices aren’t helping inflation and families who need a cheap way of getting around. It is going to have significant detrimental effects on the enthusiast car scene.
A rising tide that is lifting all boats
If the market is already willing to buy a dull family car at a premium, imagine what sort of premium cheap as chips enthusiast cars will command. Or as those in economics would summarise – “a rising tide lifts all boats”.
As used cars are becoming out of reach for families who need one to replace their crash-damaged or expired one, enthusiasts might have to put their interests on hold. Or, depending on their life choices, they might have to forgo it altogether. Why bother with a hobby that costs you an arm and a leg to indulge in?
We all know car enthusiasts are raised, never bred. Most of us can pinpoint the time they caught the automotive bug. Whether it is having a petrolhead family member, watching Top Gear, or just seeing cars zoom by on the road. This interest isn’t born out of the ether.
Eventually, every enthusiast would want to scratch that itch by getting a car of their own. Something not too expensive, something to toy with and express yourself with. Something like a good and cheap used car, the bedrock and gateway of every car enthusiast.
Good luck with that.
If surging valuations in the classic car market that is killing classic motoring isn’t depressing enough, that phenomenon will repeat itself with high used car prices. What will aspiring garage wrenchers and grassroots racers be left to work with?
No longer accessible and affordable
Car enthusiasts have always indulged in their hobbies with the assumption there will be a ready supply of cheap replacements. Ragging it, and messing with the drivetrain for more power was easy. There wasn’t a big financial risk if you got it wrong. Blow an engine? It isn’t the end of the world. Just drop a few thousand dollars for a replacement banger and start over. Now, that may not be the case anymore.
Even if enthusiasts can score a well-priced example, they might think twice about competing in autocross or toying with it. They might even have to be kind to it and treat it as an investment. No more buying shady ECUs off from eBay, better stock up on Autoglym instead.
Sooner or later, normality will return to the car market. Dealer lots will once again be restocked, prices will ease back, and expectations will be tempered. However, the current stock shortages and elevated pricing will leave a lasting effect on the car enthusiast scene.
For years onwards, cars of a certain vintage will also remain a rare find on the future used market. Cars like the Toyota GR Yaris might not become the cheap Honda Civic EK Type R of a new generation.
Rather than young owners clapping out their dirt-cheap shitboxes and living in the moment, the car enthusiast scene would gentrify. Some might welcome the maturity, but a scene losing its broad and diverse audience is itself shrinking into irrelevance. It would one day be as accessible and relevant to the general population as polo.
Losing the magic to high used car prices
Becoming exclusionary rather than inclusive will be a tragic shift in the broader car enthusiast scene. Once welcoming of any individual with an ounce of petrol in their veins, the scene might become the reserve of the rich. And these demographic changes will eventually reshape the priorities of carmakers.
Seeing as where the money is, the market will slowly cater for the richer enthusiast. Rather than creating enthusiast specials for a broader audience, carmakers would focus on more unobtanium supercar projects. That is why the hyper hatch is dead, and Ferrari can’t stop printing money with their stratospheric priced specials.
Unfortunately, there is little anyone on this side of the market can do to reverse the high used car prices trend. There is no one quick fix for the current cascade of events that is skewing the market. Hopefully, there will still be a vibrant car enthusiast scene to return to when everything normalises. One can only hope.