Used car prices peaked in June 2021, according to Cox Automotive data. The average price was US$ 25,000, up from near US$ 19,500 a year before. Similarly a report by the Federal Reserve Bank of St. Louis says prices for pre owned vehicles rose by 21% in April, compared with the year before. Edmunds reported the average price is about US$ 24,000 up from US$ 18,000 a year ago; and average trade-in values were up 76% in June year on year.
Kelley Blue Book has come out with some interesting figures. The average advertised price of a used car was US$ 25,500 at the end of July, 2021- 28% higher than a year before. However dealers had a slightly larger inventory of 400,000 more cars in July than June. Supply has increased recently but is still below pre-pandemic numbers. Average new car prices are over US$ 42,000. Car supplies diminish as the price lowers with cars below US$ 10,000 harder to come by.
Most dealers agree that the price of used cars has risen due to shortages of supply in new cars, due to covid19 supply chain delays. There is an acknowledged shortage of computer chips causing production delays at factories worldwide, including Ford and GM. Some production lines have been halted.
To compound the problem international shipping has been facing bottlenecks for months. Meanwhile post lock-down demand is strong. This has had a knock on effect with buyers seeking nearly new models instead. Big dealers have been holding onto inventory rather than selling down the line to smaller dealerships. Dealers everywhere have been purchasing less inventory to avoid the risk of being caught when prices swing back. Auctions are suffering because the wholesale market is close to retail prices right now.
The general consensus is that the supply situation will ease in the next few months, and prices may drop or simply stop raising. Not every dealer is as optimistic that prices will stabilize this year. Only time will tell.
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