SACRAMENTO (CBS13) — Good news for car buyers who want to trade in their vehicle for cash: There’s a shortage of pre-owned cars, and dealerships are buying.
The pandemic and supply chain impacts from it are still at-work on the auto industry. Car companies can’t make new vehicles fast enough to meet the demand because of a global semiconductor shortage — among others. Production has slowed and can’t meet the demand that started during the pandemic.READ MORE: CBS13 Poll: Did You Do Any Black Friday Shopping This Year?
Enter: pre-owned or certified pre-owned cars.
Sacramento dealership, Niello Volkswagen, has a line of pre-owned cars in front: Jeep, Mercedes, Audi, and Porsche models sit alongside the Volkswagens. They’ll take anything make, model, or year — if they don’t turn it around to resell it, it goes to auction.
“What we’re seeing right now is that a shortage of new cars has created a heightened demand with a low supply. So what that’s doing is now there’s a higher demand on used vehicles. It’s increasing the market value,” said Eddie Thomas, general manager at Niello Volkswagen.
Thomas said cash offers for trade-ins are at their “highest ever” and it’s not a marketing ploy, he notes, used cars are in demand. Especially with online car buying picking up during the pandemic, dealerships need to have options for customers on the lot.
It’s why, he said, they’ll take anything.READ MORE: Portland's Robert Covington Fined For Mask Throwing Outburst Against Sacramento Kings
“We’re partners with Kelley Blue Book. We use their instant cash offer process. We’re a preferred buyer for them. And once you plug your condition, then make model miles, it calculates the number for us,” said Thomas.
Niello Volkswagen is even getting creative and hosted their largest Kelley Blue Book Instant Cash Offer Day last weekend to encourage customers to trade-in their vehicles. With every appraisal, customers received a $50 Visa Gift Card, free car wash, complimentary food and beverages, and a raffle ticket for prizes.
Of course, along with the freebies, they also received a cash offer in under 15 minutes. The goal, Thomas said, is to grow the number of used vehicles on the lot to make up for the lack of new ones.
An editor for Kelley Blue Book, Matt Degen, shared a statement on the demand for used cars to CBS13:
“There is absolutely a need for used cars right now. New car production has been hampered by supply-chain issues, most notably microchips, and that has contributed to both lean inventory and rising prices. With new car prices at an all-time high and selection limited, many shoppers are consequently turning to the used car market. That, in turn, has crimped supply of used cars. For buyers, it’s a challenging time to shop for a car, whether new or used. For those selling a car or trading one in, however, it is an advantage. Used cars are also selling for top dollar, and dealers are scrambling to buy them to fill their lots. Those thinking about selling a used car or in a position to do so can attain top dollar from dealers in this current market.”
To put it in perspective: In November, there are 15 new cars on the lot at Niello Volkswagen, while usually, there are 100.
“There’s really no vehicle that’s not in demand. I mean, everything from Kias and Hyundai and Hondas, up to Mercedes, Porsches, Audis, Volkswagens, everything. Everything is in high demand right now,” said Thomas.MORE NEWS: Boreal Mountain Re-Opens After Surprise Halloween Storm
Thomas said he expects the delays at auto factories to continue into 2023. As for when he sees trade-in offers going down, that’s harder to pinpoint. He said his advice for those considering a trade-in is not to wait — because there is no precedent for a buy-back market like this one.