Rising prices for new cars are impacting the pocketbooks of not just those in the market for a new vehicle.
The “trickle-down economics” of those price rises are affecting almost everything involving vehicles — including used car prices, vehicle parts, insurance premiums, repair shop costs and availability, and even car sharing.
But while the situation has been challenging for many, some good may yet come of it. Car owners — especially those who own late-model vehicles that are in good mechanical shape — can help themselves and others out, thanks to AI and other advanced technology.
Buyers are searching high and low for used vehicles — and current market conditions present an opportunity for tech companies to help these owners maximize their assets, with the market for car sharing and carpooling apps, along with other new models of mobility and financing, set to increase significantly in the coming years.
The stats
Over 91% of Americans own a car, and three-quarters of them use their car to commute to and from work. But that means that there are a significant number of cars idling in garages or parked on the street. Owners who register their vehicles with one of the popular car-sharing apps — or build their own business with a customized app — can make some money, and help out neighbors who might need a vehicle for just an afternoon.
Other emerging options, like buying used cars on a subscription basis will also likely become more popular; as seen with the California-based company NXCR, which has a platform allowing buyers to pay monthly for a used car, and other services, like insurance and maintenance.
In addition, with used cars now in greater demand, they are worth more on the resale market — and that increased value is effectively limiting or, in some cases, even reversing traditional vehicle depreciation. Now, instead of being an asset plagued by an ever-decreasing value, used cars become fully liability-free assets — and as such, banks could be more willing to provide loans to borrowers seeking to use their vehicles as collateral, lending more money to owners of older vehicles that perhaps would not have qualified in the past.
Here's what AI can do
Artificial intelligence can enhance these trends even further. Using advanced AI, car owners who are concerned that renters might damage their vehicles could use apps to better discern whom to rent to — and whom to avoid. In addition, AI-based apps could make insuring shared vehicles easier and more cost-effective, as insurance companies could use advanced data analysis to build a customized policy suited specifically to the renter, and based on the condition of the vehicle. Thus the driver will be fully covered, while the owner can rest assured that they are minimizing risk as much as possible.
Similarly, advanced data analysis can be used to help car owners ferret out the best prospects for their vehicles.
AI-based apps could analyze searches by users of a car-buying app, noting the characteristics of searches (price, size, color, age, and many others), generating automated offers that owners can send out to individuals looking to buy a vehicle.
Thus the owner is assured of getting the best possible price for their vehicle — while the buyer gets a deal as close to perfect (for them) as possible. Tech companies that specialize in advanced data analysis have an opportunity to acquire a share of both the app-based sales and sharing markets, which are both set to grow significantly in the coming years.
Right now the forecast is for the current new car shortage to last through at least 2023 — although it may take even longer for production to ramp up to meet the ever-growing demand.
The longer the shortage continues, the more the “traditional” model — where those who needed a car made their way down to the dealership and made an offer — gets disrupted.
And that disruption helps set the conditions to reset the way people buy or otherwise utilize vehicles. Companies that can get ahead of this trend will not only be helping consumers - they will be helping themselves, as well.
Eliron Ekstein is CEO and Co-founder at Ravin AI.