Used car prices continue to soar amid a new vehicle inventory shortage, report automotive industry analysts.
Prices have moved very dramatically. I’m not aware of any period in history where car prices have appreciated that quickly.
Used vehicle prices rose the most for pickup trucks and sports cars, according to iSeeCars. The average price for a used truck soared $7,383, a 25.3% increase over 2020. Convertibles came in second, rising 25.1% or $6,038, followed by coupes which rose 22.2% or $6,673.
J.D. Power predicted the average transaction price for new vehicles would rise to $38,255 in May. This prediction sent many consumers seeking bargains on used car lots. But the high demand for used vehicles and increased wholesale prices has pushed used vehicle prices higher than ever.
“Depending on the data source, year-to-date wholesale prices have probably gone up 15% to 25%,” Ernie Garcia, founder and CEO of used car sales online marketplace Carvana told Forbes. “Prices have moved very dramatically. I’m not aware of any period in history where car prices have appreciated that quickly.”
Jonathan Banks, vice president of Valuations at J.D. Power, echoed Garcia’s sentiments in a recent report. Banks’ report attributed surging used car prices to thinning new vehicle inventories because of the global chip shortage.
Banks found wholesale prices have increased 37% over the past 20 weeks and used retail prices rose 15% since the end of 2020. He wrote, “Used vehicle prices have shown no signs of softening and are expected to remain exceptionally strong for the foreseeable future.”
Cox Automotive reported the average listing price for used vehicles at $22,568, marking an all-time high for average listing prices, and predicted further increases. A report by Cox Automotive Senior Economist Charlie Chesbrough noted, “Given the strong demand from consumers and the tight supply situation, it seems likely that used-vehicle prices, already at all-time highs, will continue to rise. At some point prices will become too high and demand will recede. But we are not there yet.”
Sales of used vehicles remain strong. Carvana’s first quarter sales up 28% over the final quarter of 2020, Garcia told Forbes. Chesbrough, however, warned that as the used car sales pace quickens, used vehicle supplies will thin, leading to inventory shortages in the months to come.