You may periodically check on how the stock market is doing or follow the price of gold, but have you ever thought about the money you could make from your junk car? That’s right – junk car prices are at an all-time high, and most people are surprised at just how much they could get for theirs. This isn’t to say that you’d net a few thousand for any old clunker, but even cars in the worst condition could probably get you a few hundred bucks.
Even better, you can choose from several different ways to sell your non-running vehicle. Companies like Cash for Cars make it easy to get paid, transfer the title, and tow the car for free. You could also locate an individual buyer, or sell it for scrap metal; it’s up to you.
It should be noted that “junk cars” aren’t necessarily complete rust-buckets; many of them are actually pretty nice vehicles, if you ignore the fact that they aren’t drivable anymore. In the majority of cases, a “junk car” is what you get when the cost to repair a vehicle is more than its total worth. When you hear about junk cars, you could picture a 1975 ranch truck that hasn’t run in two decades, or you could think of a 2018 sedan that’s been in a fender-bender, but still has a perfectly good engine.
Why are junk car prices so high these days, though? As it turns out, a lot of it has to do with the impact of COVID-19 on the auto industry and car purchasing patterns. Let’s explore the details below.
Lifting lockdowns resulted in a rubber-band effect in car purchasing trends
All other things being equal, it’s safe to assume that car purchases will remain at around the same levels from one year to the next; it’s unusual to see sharp dips or increases when looking at annual sales numbers. So what happens when most people are unable to buy vehicles for a few months out of a year? They have to make up for lost time when they’re finally able to make their way to the dealerships.
This is exactly what contributed to a surge in car purchases shortly after lockdowns started easing up nationwide, but it was terrible timing for the auto industry; they didn’t have enough supply to meet demand. Whether you’re talking about new or used vehicles, there simply weren’t enough to go around. This led to many people deciding to buy junk cars and fix them up, just so they’d have a dependable vehicle.
Accidental lockdown savers decided it was time for a new car
Widespread lockdowns resulted in a sharp decrease in spending for many. Spending on restaurants, bars, vacations, shopping, and various social activities was off the table for weeks to months. For some, that money went towards an Uber Eats habit – totally understandable. For others, it simply accumulated in their bank accounts until it had grown to a nice little chunk of change. Even if it wasn’t necessarily enough to buy a car outright, it was enough for a healthy down-payment. But guess what happened when they weren’t able to find the new or used car they wanted from a dealership? They started looking for junk cars online.
Certain precious metals became more valuable
No matter how beaten-up a junk car is, some of its components will always retain value. One of these parts is the catalytic converter, which contains precious metals such as platinum, palladium, and rhodium. Platinum prices are the highest they’ve been in six years; palladium and rhodium are at their highest prices ever. Other car parts could still be valuable if they’re in working order, but a catalytic converter just needs to be attached to the car; it doesn’t matter whether or not it still functions. If you want to sell parts from your junk car, you might want to confirm that the catalytic converter is still there; theft of this valuable car part is on the rise.
Used car supply channels dried up
Where do used cars come from? Most of them aren’t from individuals who want to trade in for a newer model; they actually come from companies like car rental agencies, who typically maintain a specific turnover rate to keep their fleets looking sharp. Once global supply shortages started affecting auto manufacturers, however, it was obvious that getting replacements would be tricky. Car rental agencies started holding onto their vehicles instead of passing them on to used car dealerships, which meant that the dealerships had to find other sources of used cars.
One of their sources included junk cars, provided they were the right makes and models, and provided they could be repaired without impacting profit margins too much. Of course, this new source of demand for junk cars played a part in driving up their value.
The auto industry ran into shortages and delays
There have been labor shortages, factory shutdowns, shipping delays, difficulty getting materials, and more. The biggest problem would be the worldwide semiconductor shortage, which is affecting car production and many other industries. Unfortunately, auto makers don’t represent a large portion of the demand for semiconductors, so they aren’t very high on the list of buyers for the limited supply. And with each car needing about 2,000 semiconductors each, you can see how this would be a pretty crucial issue in car production.
The pandemic caused people to prioritize private over public transport
With constant PSAs about avoiding human contact and public spaces, a lot of people decided that the pandemic was a great reason to invest in a vehicle. This would let them avoid metros and buses, and bring some peace of mind during a stressful time. It also had the effect of driving up the demand for functioning vehicles, which eventually overflowed onto junk cars.
The takeaway
From the high values of precious metals, a scarcity of used cars, and global supply shortages, many different factors have converged to make junk cars more valuable than they’ve ever been.