Used car prices: when experts say they could go down
Shortages caused by the pandemic have made used cars more expensive.
If you are looking for a used car, you have probably noticed that it is more expensive than usual.
Shortages linked to the coronavirus pandemic have pushed up prices – meaning the market is good for sellers but not so much for buyers. And while some experts have offered predictions of when costs might come down, others say it’s unclear how long they will stay high.
The average used car price rose 12.5% between last year and this year, from $ 21,020 in February 2020 to $ 23,643 in February 2021, according to the National Automobile Dealers Association.
Ivan Drury, auto industry analyst at Edmunds.com, told CNN that low-used cars currently sell for 70% to 80% of their sticker price, up from 65% to 70% in 2019.
Experts in the automotive industry therefore offer their advice to help buyers and sellers navigate the current market.
When could prices come back down?
Consumer Reports says the demand for used cars will likely continue to increase over the next several months, as more businesses reopen and people look to spend their stimulus checks or tax refunds. . But he says the “bottom line” is to buy a car when it is “right for you”.
“The market will eventually calm down, but it may take a while,” says Consumer Reports. “So if you want to buy now, do your research on current prices and offers, and be open to considering multiple models to increase your chances of realizing significant savings.”
Consumer intelligence agency JD Power predicts that used car prices will continue to rise even after the pandemic subsides.
“It should happen relatively slowly, however, and last for a moderate period of time,” JD Power wrote in early March. “The current peak linked to the pandemic is just an anomaly. Either way, advanced technological features, rising production costs, and inventory issues associated with the pandemic are expected to keep used car prices modestly higher for years to come. “
But, while JD Power says prices are unlikely to return to where they were before, “today’s inflated prices are unlikely to become the new normal.”
Ron Montoya, editor of consumer advice at Edmunds.com, wrote in April that car prices and inventory would likely be affected by “at least the second half of 2021.”
“This means 2021 is unlikely to be a normal year in terms of any reductions you might experience,” Montoya wrote. “Edmunds experts are advising consumers in the new car market to start shopping as soon as possible.”
Why are the prices so high?
Computer microchips and other supplies needed to manufacture vehicles have been scarce over the past year.
When car dealerships and manufacturers closed at the start of the pandemic, CNBC reports that chipmakers focused on electronics like computers and video game consoles. Now they are struggling to meet the renewed demand from the auto industry.
“The chip shortage is causing a lot of chaos,” Drury told CNBC. “But these chips are essential for a car because it’s basically a running computer.”
Data from Cars.com shows that the inventory of new cars fell by more than 15% between February and April.
As the inventory of new cars shrank, consumers turned to used cars – which strained that supply and pushed up prices, according to Cars.com.
But some used cars are more expensive than others.
“The make, age, mileage, condition and features of the vehicle all influence its value when sold or traded in at a dealership,” says Cars.com. “Usually the demand for a specific type of vehicle also has an impact on value. For example, pickup trucks and large SUVs are in high demand, while the demand for sedans is declining. With all the pent-up demand from the pandemic, prices are high across the board. “
While it’s more expensive to buy a used car now, some experts say it’s a good time to sell the extra cars you might not be using.
Drury told CNN it’s a good idea to check the value of your aftermarket used car online.
“At a minimum, you’ll know how much it’s worth,” Drury said. “And, at the same time, you might actually find out, yes, that it’s not worth having at the same time.”