- Andrew Lambrecht decided to sell his 2016 Chevrolet Volt last year when the used car market was hot.
- He sold it in December for $20,338 through Vroom. He had originally bought it for $15,000.
- He used the money to put a down payment on a new Mini Cooper SE.
Today it is almost impossible to buy a car at a reasonable price. Whether you’re basically paying the original sticker price for a vehicle several years old or ridiculous price increases on new cars at dealerships, it’s clear times have changed for would-be car buyers.
However, the loss of one can be the gain of the other, and if you time the market right, you can make a significant profit. I did just that – and there is still time for you to do the same.
In September 2020, I bought a used 2016 Chevrolet Volt plug-in hybrid for $15,000. Its original MSRP was $40,280, so by the time I bought it, it had lost nearly 63% of its value. Most used cars loss about 60% of their value within five years of ownership in a normal market, so the Volt stayed in line with the average.
Based on the depreciation rate, I planned to keep it for about a year or two and expected it to sell for about $10,000 to 12,000. But it went much better than expected.
Looking at the market for opportunities
During the first two years of the pandemic, used car prices rose intermittently and then stayed there – causing the timeline of prizes look more like a staircase than a gradual upward slope. Still, my Volt’s online trade-in value hovered around $12,000 in the winter of 2021.
To keep track of the values I used both pious and Carvana’s online trade-in tools. These two websites give you an instant offer, so you don’t have to wait long at a dealer
AutoMax usually offers me less.or the like. Of all the online car buying websites, I’ve found that these two offer the most competitive value, with:
As the pandemic continued, prices rose even more. When times became uncertain for many Americans in the summer of 2020, Demand for new vehicles has fallen† Earlier the same year, when China went into lockdown, its semiconductor output has shrunk† These chips are important: they control everything from the infotainment system to semi-automatic driving functions such as adaptive cruise control or lane assistant.
But in 2021 car sales started to pick up again – especially in the EV space – but there just weren’t enough semiconductors for these new cars. While the vehicles that rolled off the assembly line were essentially complete, they were just missing a chip.
Many automakers couldn’t keep up with demand, so buyers had to return to buying used cars due to low dealer inventory. Combine this with inflation and used car buyers faced huge price increases.
Today’s car owners, meanwhile, faced an unprecedented opportunity: selling their cars at a net profit, a feat few cars in the past could achieve.
make the sale
Last spring I started noticing an increase in the trade-in values of my Volt. In mid-March 2021, Carvana offered me $14,643 for my Volt, which was very close to its value when I bought it. I wanted to trade it in for a more recent BMW i3 electric hatchback, but I decided to hold on and see how much further it would go. What I would soon discover is that as I put off the trade-in, the BMW i3 values increased just as steadily, so it was essentially a non-zero-sum game.
At the end of April, Carvana made an offer of $15,083 on my car. This was the first time I ever received a higher amount than I bought it for. I was tempted to grab the money and run away, but again I decided to wait it out.
During the summer, its value continued to rise. In September, Carvana’s $15,000 turned into $16,432. As my desire to flip it for profit grew, I decided to hold out longer. At the end of December, the Carvana value started to fall, but the Vroom value suddenly increased dramatically.
Just days after Christmas, Vroom offered an unmatched value of $20,338. I quickly accepted.
A few days later, a contractor picked up my Volt on a flatbed, and within a week, Vroom mailed me the check. While I probably could have just sold it for a little more, this process was seamless and easy. Excluding taxes and maintenance fees, which were about $800, I made $5,338 off my original purchase price.
On to the next ride
Since I sold my car when the value was high, it would make sense that I would have to pay more for my next vehicle as well. While I really wanted to buy a BMW i3, I had no intention of paying more than $25,000 for a four-year-old car.
One car I had my eye on, however, was the Mini Cooper SE — an electric two-door with an advertised range of 114 miles. BMW owns Mini and the Cooper SE shares many of its components with the BMW i3, its German cousin.
Most importantly, a brand new Mini Cooper SE with the $7,500 federal EV
costs about the same price as a used BMW i3. For me it would have been insane to buy a used BMW i3 when I could have gotten a brand new electric Mini Cooper for practically the same price.
The 2023 Mini Cooper SE starts at $34,750. However, at select Mini dealers, such as my local Charlotte center, you can special order the basic “Signature” trim for $30,750. It lacks some features like premium audio, a sunroof, and some paint options, but to me, it’s worth the $4,000 savings. It also qualified for the $7,500 federal tax credit, but note that you must pay at least $7,500 in taxes to take full advantage of it.
My local Mini center charged an additional $1,396 in dealership fees, bringing the retail price up to $33,065, including taxes and state registration. Taking the tax credit into account, my 2023 Mini Cooper effectively costs $25,565.
I made the $250 deposit on the Mini so hopefully it will arrive this summer. With an opportunity like this, it’s best to make the most of it, and the electric Cooper was the most financially sound way to exploit the market.
Everyone’s situations are different, but if you’re looking to trade in your current vehicle, it’s worth seeing how much you can get.