Average Used Car Price Crosses $27,500
Prices are up over 30% from January as inventories remain low.
It's been an interesting couple of years for the automotive market. A global pandemic cut demand significantly, only for automakers to get caught out by a rapid bounceback, leaving them short on fresh product. New cars are thin on the ground, and it seems used cars are drying up too, driving up prices across the board. Prices have reached new heights, with Car and Driver reporting that the average used car price has now soared to $27,500, according to Black Book data.
The numbers are compiled from a range of sources, taking into account franchised and independent dealers, and covering 95% of used vehicles on sale. Analysis by Black Book already showed the average sale price of used cars crossed $27,000 last month, jumping up a further $500 in December.
It appears to be a classic tale of supply and demand. There simply aren't as many used cars on sale, with Black Book pegging listing numbers as down by around 16 percent compared to earlier this year.
Others tell the same story, with Kelley Blue Book reporting that used car inventories are 15% lower than the same time last year. These figures are based on how long it would take dealers to run out of stock if they stopped receiving more used cars. The figure stood at 44 days at the end of November, though that's up from 41 days recorded a month earlier, indicating a slight increase in the supply of used vehicles.
Kelley Blue Book also notes that used cars under $10,000 are the hardest to find, putting great pressure on the bottom end of the market. Meanwhile, used cars over $25,000 are the most readily available.
One theory around this is that due to the lack of new cars on sale, dealers are receiving less trade-ins to sell on the used market. Alternatively, it could be that without as many new vehicles to buy, people are looking to the used market instead. This is particularly the case for some sought-after models, with the new Ford Bronco being an excellent example. It's virtually impossible to get a new one from Ford right now, leading one owner to attempt to flip their truck for over $100,000 on eBay.
On the general increase in price, Black Book states that "In Q4, prices on retail listings have steadily increased week after week and the retail listing price index now sits at around 35 percent above where we started the year," adding that "the scarcity of both new and used inventory in the market fuels these consistent increases."
Thus, it seems that until automakers can build enough new cars to meet demand, prices will remain elevated for both new and used vehicles. It sure is a tough time to buy a car.
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