We’re all familiar with the fluctuating prices of things like gas, groceries, and even gold – but what about junk cars? As it happens, junk car prices have been climbing rapidly over the past couple of years, and they aren’t likely to slow down anytime soon. Due to a variety of factors, it’s easier than ever to make money from your non-running vehicle. Getting cash for junk cars doesn’t have to be complicated; there are loads of reputable online businesses that’ll take them off your hands with no questions asked.
The question is, what’s driving junk car prices up? That’s pretty easy to figure out; let’s get into the details.
More people felt the need to have their own transport
As everyone started adjusting to the new COVID-19 restrictions in the first half of 2020, many people wanted to avoid public transport like taxis, buses, and metros. Buying a new car wasn’t necessarily a budget-friendly option, but used cars presented a much more affordable choice.
This meant that used cars quickly became hard to find, and guess what people started buying instead? Junk cars. A lot of non-running vehicles just need a couple of key repairs in order to be road-worthy, and there was plenty of demand for anything that could take someone from point A to point B. Even if a junk car’s current owners didn’t want to shell out for repairs, someone else might have been happy to if it meant they could have an affordable vehicle.
Semiconductor shortages created major bottlenecks for global vehicle production
It seems like there are shortages for just about everything due to the pandemic, but the semiconductor shortage has definitely had the most impact on the auto industry. With about 2,000 semiconductors being needed for each car, there’s really no way to work around the problem.
A shortage of new cars led people to buy up all the available used cars, which put pressure on the used car market. As we already saw above, when the used car supply gets drained, consumers start buying more junk cars; this also played a part in driving up junk car prices.
The usual supply channels for used cars fell apart
All other things being equal, the used car market gets vehicles from a variety of sources to meet demand. One major source is rental car fleets, but with new vehicles being in short supply, the rental companies decided to hold onto their current fleets for longer. This meant that one of the major supply lines for used cars had suddenly dwindled; used car dealerships had to get creative in order to maintain their stock.
In many cases, their strategy was to purchase junk cars with minimal damage, repair them, and then sell them as used cars. As it happens, plenty of “junk cars” aren’t total rust-buckets; they could be in-demand vehicles that need pricey repairs, which the owners aren’t willing or able to pay. It may not make sense for the current owners to repair a vehicle like this, but a used car dealership could make a decent profit on it.
Not only did used car dealerships start buying more junk cars, but they also started buying more used car parts in the course of having them repaired. And guess where these parts came from? That’s right – junk cars. Between one thing and another, there was no stopping the demand for junk cars.
Precious metal shortages drove up prices
You may have heard about the rising rates of catalytic converter thefts. This is because catalytic converters contain precious metals like rhodium, palladium, and platinum. They’re all extremely valuable, and supply shortages have made them even more so. Platinum prices are currently enjoying a six-year high, while rhodium and palladium are pricier now than they ever have been. It’s likely that they’ll eventually level out once supply shortages are resolved, but for now, anyone with a junk car can be sure of getting value from the catalytic converter, if not from other parts as well. It doesn’t even have to work; as long as it hasn’t been stolen by an enterprising thief, the precious metals inside will guarantee a good price.
Lifting pandemic restrictions resulted in surging car purchases
This was just a matter of right place, wrong time. As much of the US population was in lockdown or under other restrictions, vehicle purchases naturally slowed down. Once those restrictions had eased up, though, all the people who’d been waiting for a new (or used) car were suddenly buying whatever was available. Unfortunately, this created a rubber-band effect with car purchases, which put a ton of strain on the new and used car industries. Junk cars stepped in to fill the gap, and increased demand led to a spike in prices.
Lockdown savers used the extra money on vehicles
Under normal circumstances, most people spend money on stuff like social activities, going to restaurants and bars, or vacations. If they can’t leave the house, though, where does that money go? For some people, it went into their bank accounts and stayed there until after the lockdowns ended; later, that money ended up being used for new or used vehicles. Along with the sudden surge in auto purchases post-lockdown, this created even more demand for cars of any type, including junk cars. Even if their first choice was a new vehicle, those weren’t necessarily available. The same went for used cars. If that turned out to be the case, consumers could either wait up to a year or more for their car of choice to become available, or they could find a fixer-upper that would get the job done for a lot less money. As you can probably already guess, this contributed to the rising value of junk cars.
Whether it’s supply shortages, pressure on the used car market, or skyrocketing precious metal values, there are all kinds of reasons why junk car prices have gotten so high. Now the main question is: what will they do next?