Used car prices in Seattle skyrocket, with some paying retail value – KIRO 7 Seattle News
SEATTLE – Global microchip shortages are being felt locally as car buyers almost pay the retail price of used vehicles.
A few dozen cars are currently filling the lot at Daily Deals Auto Sales in Seattle.
âWe are very proud of all of our cars. We buy them. We select them by hand. Basically, we don’t buy just any car, âowner George Riad said.
As the name suggests, the company’s goal is to provide deals on cars.
âWe have Subarus. We have trucks. e have sedans. We have manual transmissions. We have SUVs, âsaid Riad, pointing to the cars in the field. “We’re trying to do all the prices from 3995, up to 40,000.”
Since April, the small dealership has been selling cars faster than it can buy them.
The dealership tries to keep a full inventory of 50 vehicles. Today it has 28 cars, the largest number for more than six weeks.
“I ended up with 10 cars at the end of April,” said Riad. “And we were pissed off that we can’t replace the cars that we sell, so that’s when we start to price those cars a thousand to two thousand more.”
Last year, on average, Riad sold 20 to 25 cars per month. This year that number has doubled. In April and May, he sold an average of 45 cars per month. Even still, in August, he sells 30 cars a month.
But more cars doesn’t mean he’s making more money. During the same period, Riad said its profit margin fell by 50%.
âWe are not buying them as cheaply as we were a year ago,â said Riad. “So we’re paying all this money for these cars, and our profit margin has obviously gone down this year because, you know, we’re buying high and we’re trying to compete with the market.”
The problem facing Riad is part of a national trend.
Earlier this year, a global shortage of microchips hampered the production of new vehicles. In turn, the used cars that usually went to smaller sellers were kept and bought by the larger dealerships. Ultimately, this pushed the price of used cars up to new retail levels and made it difficult for smaller sellers to stay competitive.
âIt’s just supply and demand. We have so many buyers coming into the market and buying cars, and we can’t keep buying cars, âRiad said. âNew car stores basically buy these cars that they used to say, ‘Hey, we don’t want those old cars. We will send for auction. And then little guys like me will go to the auction and buy these cars. Now the new car stores keep these cars for their lots because they are empty. â¦ So it’s just a shortage of cars.
In recent months, Riad has said that trying to buy cars at auction has been “fierce”. There are fewer vehicles. And often they are sold for near retail value due to the shortage of supply.
âIt blew me away because how are you going to make money when you go to the auction and buy three, four cars at retail. How are you going to make money?â He said.
Nationwide used car prices have jumped 32.7% since last June, according to a new iSeeCars study.
In Seattle, used car prices soared 27.7%; this equates to $ 6,991.
Riad said this figure is true for the newer cars on the market. Meanwhile, Riad said older cars have risen from around $ 1,500 to $ 3,000.
For example, Riad bought a 2016 Mercedes with relatively low mileage and only one previous owner at auction for around $ 31,000; he sells it for $ 31,995.
He will make less than a thousand dollars on the car and expects it to stay on his lot longer because his company is not a Mercedes-Benz dealership.
Around the same time last year, that same car would have cost him $ 25,000 to $ 26,000. He would have sold it for $ 27,000 to $ 28,000.
âSo five to six thousand cheaper than it is now,â Riad said.
Riad said that with such a small profit margin, it made no sense for him to buy a lot of high-priced cars. Instead, he finds cheaper, in-demand vehicles that will sell out quickly.
âIf we do enough per week, then we are able to survive and maintain the concession,â Riad said. “We try to price these cars very aggressively, so I don’t want them to be in the field for two months or 50 days.”
Currently, Riad sells around 28 cars per month and earns between $ 700 and $ 1,000 per vehicle.
While sales have slowed since April, Riad doesn’t expect the buying frenzy to end just yet.
âI think this will keep that going for another six months to a year. I would say it won’t be anytime soonâ¦ because the auctions will always be at very high prices, âhe said.
Sports cars and pickup trucks saw the biggest price increase, according to the study, making them the worst to buy and the best to sell. Small SUVs, sedans and minivans are the most affordable.
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