Will the prices of second hand cars go down? Expert commentary

In the second-hand automotive market, which entered 2022 sluggishly and started to move since mid-February, the eyes were turned to the updates to be made in interest and vehicle loan terms of use. Second hand pricesReminding that the foam pricing in the last month of last year, the figures exceeded the expectations of the consumer, experts said,This foam is gone with the decrease in demand and exchange rate, but there is no possibility of a decrease in prices due to the recent price increases at zero and the stabilization of the exchange rate. According to experts, February and March are the months of opportunity in terms of price for those who will buy second-hand cars this year.

He states that sales started slowly, as in January of last year, but regained momentum as of February.

The second-hand automotive market, which started the year sluggishly, is expected to reactivate with the elimination of uncertainties in the arrangements to be made in vehicle loans and limits, and pricing.

One of the sectors that was most affected by the Kovid-19 epidemic, which affected the whole world, was automotive. Automakers had to reduce production due to problems in the supply of critical products such as basic raw materials and chips. While the factories stopped production in the early periods, it caused a problem of availability, and users who could not find new vehicles turned to second-hand vehicles with the increase in demand for individual vehicle use during the epidemic period. Despite the increasing demand, the fact that new car orders took a long time accelerated the tendency to second-hand vehicles.

In the face of the shortage of new vehicles, the increase in production and logistics costs, and the increasing demand for automobiles, there was an increase in used vehicle prices in Turkey as well as in the rest of the world. In addition, the semiconductor (chip) crisis that emerged during the epidemic period also caused disruptions in production and negatively affected the supply-demand balance.

The main reasons for the stagnation in the second-hand market in Turkey are the expectations that vehicle loan rates will decrease, that loan utilization rates and limits will be adjusted, and that prices will decrease further this year due to the almost constant exchange rate.

“A better sales pace has been achieved in February than in January”

Birkan Çalışkan, Director of Second Hand and Fleet Operations of Otokoç Automotive, told Anadolu Agency (AA) that the uncertainty experienced in vehicle prices and the subsequent price decreases due to the exchange rate fluctuation that started in the second half of December continued in January, due to the revision in the new vehicle SCT application in mid-January. He said that the expectation of a decrease in second-hand prices further increased the uncertainty in the market.

Stating that the consumer put the purchasing decision on hold in this price uncertainty, Çalışkan said, “In the period from mid-December to the end of January, prices of second-hand vehicles have decreased by 14-15 percent depending on the model. Even in some vehicle models, this decrease exceeded 20 percent. Sellers, especially those who have second-hand vehicles in their stocks, which they have recently purchased at high prices, had difficulties and faced high inventory costs. February started as a period when uncertainties disappeared and stable price levels were formed, and a better sales pace has been achieved compared to January.” said.

Çalışkan stated that in this period, especially in the face of increasing new vehicle prices due to the exchange rate, the customers’ interest in the second hand continued, but the demand for the second hand was concentrated on more affordable vehicles over 4-5 years old, rather than on younger vehicles.

“The most important factor affecting sales is consumer loan interest rates”

Noting that consumer loan interest rates are one of the most important factors affecting sales in the market, Çalışkan said, “As long as consumers in our country can find loans with appropriate interest rates, they continue to buy second-hand cars. Another factor is price levels. Depending on the purchasing power, customer demand is gathered in certain model and vehicle age groups, which are more affordable. It is normal for the first months of the new year to be at a lower pace compared to December of the previous year, especially because of the companies’ preferences to make purchases at the end of the year and the expectations of individuals for sales campaigns at the end of the year. However, the sales pace in January and February 2022 was well below expectations. used the phrases.

“The movement that started in February will accelerate even more especially in March and April”

Stating that it is possible to expect normalization in the market, especially as the uncertainties in pricing disappear, Çalışkan said that the chip crisis in new vehicle production continues in the same way and the demand for second-hand vehicles will start to increase again due to this difficulty in new vehicle availability.

Noting that the movement that started in February will accelerate especially in March and April, Çalışkan said, “On the other hand, vehicle loan interest rates will also be decisive. With a regulation made by the BRSA in 2021, new limits were set in the use of vehicle loans and loan terms were reduced. Both the possible decrease in interest rates and the updates to be made in the terms of use of vehicle loans can bring the market movement forward and create a positive effect. We, as Otokoç 2nd Hand, make an important contribution to the development of the sector and other sectors that feed this sector, with our structure that accurately reads the expectations and needs of our customers, the course and conditions of the market and responds quickly. With 94 years of Otokoç Automotive experience, we offer a reliable second-hand vehicle buying and selling experience away from all worries, risks and difficulties.” he said.

Birkan Çalışkan stated that new vehicle prices follow the exchange rate and second-hand vehicles follow the prices of new vehicles, and the prices are shaped accordingly, adding, “In the period in which the exchange rate remains constant and the prices of new vehicles do not decrease for any reason, there is also a market in the second-hand market. It may not be right to expect a price decrease.” said.

“As of mid-February, sales started to open”

Auto Center Top Manager (CEO) Muhammed Ali Karakaş also stated that the new year started very sluggishly, but sales started to open as of mid-February.

Karakaş stated that consumers generally prefer low-segment cars with an average price of between 180 thousand and 230 thousand TL and low fuel consumption.

Stating that purchasing costs such as exchange rate, inflation and interest rates affect the consumer, Karakaş said, “Usually, the first quarter of the year is stagnant in second-hand cars, but this year there is an extra stagnation due to the expectation of a decrease in the inflationary prices that have increased from last year.” said.

Karakaş said, “The eyes and ears of the market are especially in the change of maturity and down payment rates from the BRSA. Consumers are expected to take action after this decision. Especially the consumer expects low down payment and long term opportunities. If this expectation is met, the market will become seriously active. With the increase in rental demands in direct proportion to tourism, as in mid-March, the concentration of rental companies on second-hand purchases will revitalize the market.” used the phrases.

Noting that the second-hand prices have risen above the figures predicted by the consumer, especially with the foam pricing in the last month of last year, Karakaş said, “With the decrease in demand and exchange rate, this foam disappeared, but when the exchange rate took a long time to stabilize, this decrease expectation was revived in the consumer. With the recent price increases at zero and the stabilization of the exchange rate, there is no possibility of a decrease in prices. On the other hand, if we add the increasing energy and logistics costs around the world, it is very difficult to decrease the prices of automobiles. Therefore, we think that February and March are the months of opportunity in terms of price for those who will buy second-hand cars for this year.” he evaluated

“The factors that reduce demand are ‘access to credit with loan interest rates’”

Otoshops General Manager Melih Mutlu stated that the decline in sales, which started in the last months of last year, continued in the first 2 months of the year, and that consumers started to tend to second-hand vehicles after the increase in new vehicle prices.

Mutlu stated that this period was more stagnant in the second-hand market compared to other months, since the first months of the year are usually the period for determining the new model year prices of new vehicles. and that the factors that reduce demand are seen as “loan interest rates and access to credit”.

Mutlu said, “With the exchange rate being at constant levels and the prices in the automobile market starting to settle down, the market started to move compared to the previous month. After the regulation to be made in vehicle loans, which is expected to be announced in the coming days, we expect the market to become more active.” he said.

Noting that the prices of new cars are the reference point of the second-hand market, Mutlu said, “As new car prices are calculated based on foreign currency, both actually affect second-hand prices. Prices in the second-hand market fell between 14 percent and 19 percent compared to December 2021. However, we may face an increase in second-hand prices in the coming days, as vehicles with the 2022 model year are offered for sale at higher prices compared to the previous year due to cost increases, and many models fall into the 80 percent SCT segment due to these increases. made its assessment.

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