Why Are Car Prices Likely to Crash Over the Next Several Months?
I am a car accident attorney, Michael Ehline. Below I will discuss the reasons for vehicle pricing fluctuations within the United States.
Reason 1. Fewer People Driving
The fall of traffic miles on America’s roads is one of the starkest after-effects of the COVID pandemic. Even correcting for seasonal factors, millions of Americans drive less than in years past. Combining the virus and an anti-individual rights economy, a decrease in car accidents and income will likely continue.
What Does A Vehicle Traffic Expert Say?
My decades of experience watching the effects of traffic– and accidents give me a unique perspective on the current situation. It is unusual to see Interstate 5 or the 405 car-free, even during daylight hours. The effects are astounding by observing driving trends over the last three decades in my role as an accident expert. Since COVID, I have seen people put their faith in politicians more interested in politics than their constituents pursuing personal happiness. Let’s take a look at some causes and effects.
Understanding Drop-in Traffic
The states of emergency surrounding the Coronavirus pandemic affected American habits. Perhaps outside of health concerns, none have been as dramatic as the fall in the use of America’s roads. The decline in driving for most purposes will likely affect cars’ prices for the foreseeable future. Furthermore, reduced road miles will mean lower gas prices and fewer accidents.
The crisis’s economic issues will also leave less disposable income in Americans’ pockets to purchase a new car. Even before the virus, there were already projections that Americans would drive less in 2020. By April 8th, the total number of miles driven on America’s roads fell an astonishing 58%. The reduced driving hours even prompted insurers to refund the fewer miles behind the wheel.
What’s Gonna Happen to Car Prices?
According to USA Today, the effects are far-reaching. Furthermore, the LA Times reported on the broad economic impact of such a drop. These financial considerations include:
- Severe effects on traditional brick-and-mortar jobs. Many offices are closed due to the pandemic. It is unlikely that such a work model will return to normal even after a vaccine.
- Declining paychecks. If the economic crisis continues much longer– especially considering current double-digit inflation, consumers will prioritize saving over a new car.
- The role of the ripple effect. The decline in car prices and a decrease in demand will likely lead to a bandwagon effect. This means that prices will continue dropping even after part of the economic recovery begins.
- The rise of the virtual office. Related to the above, as many Americans transition into working remotely, there is a high chance that they will not need a vehicle in the same way as before. This is likely to reduce the case of the carless purchasing one on a whim.
With COVID-19, even if fuel costs rise, you will see fewer car crashes and injury lawyers closing their businesses. Also, PI lawyers tend to buy expensive cars like Mercedes and BMW. These spendthrifts won’t be spending their money funding cases because they have failed to sign and settle any significant contingency fee cases. Add all of these factors together, and you have a perfect storm for a sharp and sustained decline in car prices over the coming year or years.