May 26, 2020

Crashing Car Prices

Not Getting Behind the Wheel.

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 are driving less than in years past. The combination of the virus and an anti-individual rights economy, a decrease in car accidents, and income are likely to continue.

Understanding from a Vehicle Traffic Expert.

My decades of experience watching the effects of traffic-- and accidents give me a unique perspective on the current situation. It is truly unusual to see Interstate 5 or the 405 car-free, even during daylight hours. By observing driving trends over the last three decades in my role as an accident expert, the effects are astounding. Since COVID, I have seen people put their faith in politicians more interested in, well, 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 had many effects on American habits. Perhaps outside of health concerns, none have been as dramatic as the fall in use of America's roads. The decline in driving for most purposes will likely have a profound effect on the price of cars for the foreseeable future. Furthermore, reduced road miles will mean lower gas prices and fewer accidents.

The economic issues surrounding the crisis will also leave less disposable income in Americans' pockets to purchase a new car. There were already projections even before the virus 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 some insurers to give refunds for 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 wide economic effects 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, coupled with a decline 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 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 chance of the car-less purchasing one on a whim.

Look for the sheer number of car crashes to decrease, and for many lawyers in the injury business to go under. Also, PI lawyers tend to buy expensive cars like Mercedes and BMW. They are not gonna be spending when they are not setting big 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.