Used Car Prices Skyrocket
When used car prices skyrocket, it can mean any number of things. If you haven’t been shopping for a used car lately, you might not have noticed.
iSeeCars recently performed an analysis of over 1.2 million used car sales that occurred in April 2021 and found that used car prices have increased by an average of 16.8 percent, or $3,926, compared to the same period the last year. The Chevy Corvette leads the way among cars with the highest year-over-year price increase, with the average used Corvette selling for $17,432 more April 2021 compared to April 2020, equivalent to a 33.9 percent jump.
The Chevy Camaro is experiencing a similar trend and was the seventh on iSeeCars‘ list of the highest year-over-year vehicle price increases. The average price of a used Camaro has risen by an average of $6,582, or 26.7 percent, in the past year.
Why Have Used Car Prices Been Rising?
Car dealer lots have only a fraction of the vehicles that they typically have — both new and used. It’s helping send prices to record levels.
The average new car price was $37,200 in the first quarter, according to JD Power, is up 8.4% from the same period just a year ago.
About half of car buyers are paying within 5% of the sticker price, according to JD Power stats, with some even paying above sticker. About two million more car buyers this year will end up paying that close to sticker price than a couple of years ago.
Wholesale prices for used cars sold at auction are up 26% since the start of this year, according to other data from JD Power, further fueling inflated prices.
Retail used car prices are up a more modest 7% in the same period. That’s also a significant jump for this time of year, and the higher wholesale prices are pointing to bigger increases on the way.
Now sales are booming, with March’s seasonally adjusted sales rate for new cars hitting the highest level since October 2017.
But that demand is coming at a time when auto plants around the globe are closed or running at reduced production due to a computer chip shortage. New car production in North America is down about 3.4 million vehicles in the first three months of this year, according to Cox Automotive, causing low inventory supply. The used car market is just as tight, with some measures of supply and demand in the sector showing the greatest scarcity on record.
Those two factors — strong sales and limited supply — are feeding the price boom.
As used car prices skyrocket, who wins?
Well, car dealerships get to make up for some of the deficits they experienced during the pandemic. Of course, not many people are in favor of car dealerships making money, it seems, despite the fact that businesses are built around making a profit.
Sellers who have been hoping to get top dollar or top trade-in value are in luck, although buying a new car will cost them more than ever. Since car dealers have very low inventory of certain models