EconomyIs it a good time to buy or sell...

Is it a good time to buy or sell a car?

(Expansión) РA few days ago, one of my best friends told me that she would like to change her car, but that she was not sure if it would be enough to buy a new car, so she told me that she considered her best option to look for a used car.

Following that comment that would sound very logical, articles that I had read and comments that I had heard came to mind, where they explained that as a result of the pandemic used cars have become more expensive. Due to the above, my friend and I took on the task of investigating what would be her best option.

In case you find yourself in the same situation and don’t know what to do, I will share with you a little of what we found out and what from my point of view would be the best option, as well as some tips to consider before making a decision.

To begin with, let me explain the context; The automotive industry has been one of the most affected by the pandemic, since it was not considered an essential activity, for which it was necessary to stop operations for a few months, which affected inventories, deliveries, sales, and so on.

In summary: the entire production chain was impacted. Once they resumed operations, problems began to appear in the distribution chains. On the other hand, people in general were stressed by the negative economic effects that the pandemic could generate, so large purchases, such as a car, were not in mind.

Subsequently, the economies began to reopen and with this began the need to mobilize people; however, there was a fear of getting infected, so those who had managed to save during the pandemic could choose to want to travel more by their own car, considering it the safest option for health.

But we ran into the surprise that the inventories of the automakers were at very low levels and supplying them would be difficult, since there was now a global shortage of semiconductors, which until now has not given up. As a consequence, the supply of new cars was not enough for the demand, so many began to choose to buy used cars, increasing their demand and, therefore, prices.

Now that we understand the situation of the industry, I will tell you that I carried out an exercise to see what was most convenient. We got into a well-known app today for the sale of used cars, where we found a truck at a price of 436,999 pesos, year 2021, I consider it a good price, but when you go to the page of the automaker and quote the same 2023 unit, new, the price would be 495,400 pesos, that is, 13.3% higher than the price of the used car.

If we take into account that a used car could require more maintenance or revisions with the mechanic, I do not consider that 13.3% to be a high increase; It would be a matter of each one weighing what they give more value to.

The effect of used car prices has not only occurred in Mexico, but has been widespread, so that even in European countries such as Germany there has been an increase of up to 25% vs. pre-pandemic numbers. The important thing is to mention that this effect is only temporary, we hope that when the supply chain begins to regularize production and inventories, prices will also do so, so the depreciation of cars would take its course again.

In case you want to buy a car in the short or medium term, from my point of view, if it is within your possibilities and you are not in a hurry, it would be better to think about a new car, since the difference is not much, you just have to to be aware that depending on the car you want; that is, brand, color, amenities, among others, it is likely that you will have to be on a waiting list, which can go from weeks to months for your car to be delivered.

On the other hand, if you are the one interested in selling your car, the recommendation would be that you take advantage of this period of increase in used car prices, since in the month of August, according to Inegi, the automotive industry has been recovering, with an increase in sales of light vehicles of 16.5% YoY, so it is likely that there will not be much time left to start seeing a regularization in prices as I mentioned.

In conclusion, if you are a buyer, I recommend that you compare prices whether used or new; Likewise, I suggest you ask about financing or credit facilities and do not forget to investigate how long it will take for the car to be delivered to you, preferably not only in agencies, try to find out times with people who have recently bought a car.

If you want to sell your car, don’t think too much about it because, although I don’t expect the outlook in terms of used car prices to change by the end of the year, it is likely that the industry will begin to show signs of recovery, which would help the demand and supply of new cars begin to regularize and would result in a normalization of depreciation.

In order not to leave you in doubt, my friend decided to buy a new car, I just hope it will be delivered to her soon.

Editor’s note: Alejandra Vargas is a stock analyst at Grupo Financiero BX+, a financier and a bit of an accountant, she practices ice skating, yoga and likes to read books on various topics. Follow her on . The opinions published in this column belong exclusively to the author.

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