- Andrew Lambrecht decided to sell his 2016 Chevrolet Volt last year when the used-car market was hot.
- He sold it for $20,338 via Vroom in December. He'd originally bought it for $15,000.
- He's used the money to put a downpayment on a new Mini Cooper SE.
Today, purchasing a car for a reasonable price is nearly impossible. Whether you're paying basically the original sticker price for a several-year-old vehicle or facing ridiculous markups on new cars at dealerships, it's apparent that times have changed for prospective car buyers.
However, one person's loss can be another's gain, and if you time the market right, you can make a substantial profit. I did precisely that — and there's still time for you to do the same.
In September 2020, I purchased a used 2016 Chevrolet Volt plug-in hybrid for $15,000. Its original MSRP was $40,280, so it had lost nearly 63% of its value by the time I'd bought it. Most used cars lose around 60% of their value within five years of ownership in a normal market, so the Volt stayed in line with the average.
Based on its depreciation rate, I planned to keep it for around a year or two and expected to list it for about $10,000 to 12,000. But things went way better than expected.
Watching the market for opportunities
During the first two years of the pandemic, used-car prices spiked intermittently and then stayed there — making the timeline of prices look more like a set of stairs than a gradual upward slope. Yet my Volt's online trade-in value hovered around a cool $12,000 in the winter of 2021.
To track its values, I used both Vroom and Carvana's online trade-in tools. These two websites give you an offer instantly, so you don't have to wait at a dealership for an appraisal or anything like that. Out of all the online car-buying websites, I've found that these two offer the most competitive values, with CarMax usually offering me less.
As the pandemic went on, prices climbed even more. When times became uncertain for many Americans in summer 2020, demand for new vehicles dropped. Earlier the same year when China went into lockdown, its semiconductor output shrunk. These chips are a big deal — they power everything from the infotainment system to semi-automated driving features such as adaptive cruise control or lane-keep assist.
But in 2021, car sales began to increase again — especially in the EV space — but there just weren't enough semiconductors for these new cars. While the vehicles rolling off the assembly line were essentially complete, they were just missing a chip.
Many automakers couldn't keep up with the demand, so buyers had to revert to purchasing used cars due to low dealership inventory. Pair this with inflation, and used-car buyers were in for massive price hikes.
Current vehicle owners, meanwhile, were in for an unprecedented opportunity: selling their cars at a net gain, a feat only very few vehicles could achieve in the past.
Making the sale
Last spring, I began noticing an uptick in my Volt's trade-in values. In mid-March 2021, Carvana offered me $14,643 for my Volt, which was very close to its value when I purchased 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'd soon find out is that as I was holding off trading in, BMW i3 values were increasing just as steadily, so it was essentially a non-zero-sum game.
In late April, Carvana presented a $15,083 offer for my car. This was the first time I'd ever received an amount more than what I'd bought it for. I was tempted to take the cash and run, but once again I decided to wait it out.
Over the summer, its value just kept increasing. By September, Carvana's $15,000 turned to $16,432. While my desire to flip it for a profit proliferated, I decided to hold it out longer. In late December, its Carvana value began declining, but its Vroom value suddenly increased dramatically.
Several days after Christmas, Vroom offered an unmatched value of $20,338. I quickly accepted it.
A few days later, a contractor picked up my Volt on a flatbed, and within a week, Vroom mailed me the check. While I could've probably sold it on my own for a bit more, this process was seamless and easy. Disregarding taxes and upkeep costs, which were around $800, I made $5,338 on my original purchase price.
On to the next ride
Since I sold my car when values were high, it would make sense that I would have to pay more for my next vehicle, too. While I really wanted to purchase a BMW i3, I wasn't looking to pay north of $25,000 for a four-year-old car.
However, one car I'd had my eye on was the Mini Cooper SE — an electric two-door with an advertised 114 miles of range. 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 tax credit costs about the same price as a used BMW i3. For me, it would have been bonkers to buy a used BMW i3 when I could get a brand new electric Mini Cooper for practically the same price.
The 2023 Mini Cooper SE starts at $34,750. However, at select Mini dealerships, like my local center in Charlotte, you can special order the base "Signature" trim for $30,750. It's missing some features like premium audio, a sunroof, and some paint options, but for me, it's worth the $4,000 in savings. It also qualified for the $7,500 federal tax credit, but note: You need to pay at least $7,500 in taxes to reap its full benefits.
My local Mini center charged an extra $1,396 in dealership fees, totaling the out-the-door price to $33,065, including taxes and state registration. Factoring in the tax credit, my 2023 Mini Cooper effectively costs $25,565.
I put the $250 deposit down on the Mini, so hopefully it'll 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 up your current vehicle, it's worth a look to see how much you can get.