Used car prices spiking as COVID-19 pandemic shakes up the market for new cars
Buyers are flooding the used-car market, looking for deals amid high prices for new vehicles, getting low interest rates and seeing a shortage of new-vehicle inventory.
If you were hoping to find some savings during the COVID-19 pandemic, you won’t find them in the used-car market, unfortunately.
Then again, you might be able to make a few bucks if you’re willing to part with a vehicle because used-car prices are spiking due to an unusual confluence of factors during the pandemic.
Among them are that buyers are flooding the used-car market, looking for deals amid high prices for new vehicles, getting low interest rates and seeing a shortage of new-vehicle inventory, according to car research site Edmunds.
The average listing price of used vehicles was $21,558 in July, up $708 from June.
“This is an unprecedented historical shift in the used vehicle market, where listing prices typically decrease during this time period due to depreciation,” Edmunds said recently.
Any hope the rental-car company Hertz’s Chapter 11 bankruptcy filing this year would cause a drop in used-car prices has diminished due to the overwhelming influence of COVID-19 on the market.
Ivan Drury, Edmunds’ senior manager of insights, said in a statement that there’s “significantly increased demand” for used vehicles, in part due to rock-bottom interest rates.
Also, automakers were forced to shut down plants for about two months in the spring due to work restrictions because of COVID-19. That led to a decline in new-vehicle inventory and a delay in 2021 models.
“It’s a seller’s market right now,” Drury said. “Although used vehicles continue to offer significant discounts compared to new, used-car shoppers will find themselves in the unusual position where they might not have as much negotiation power because demand is so high and dealers will be less inclined to be flexible.”
Drury advises buyers to be prepared to act quickly if they see a used car they want.
The price increases are especially sharp for larger vehicles, which are in high demand.
Used large pickups, for example, saw a $2,301 increase in average list price in July, hitting $33,264, according to Edmunds. Midsize trucks recorded a $1,812 increase to $29,457.
“Used-car prices are still at record-breaking levels, and in some segments, there are models coming close to new-car prices, including sports cars,” car-valuation service Kelley Blue Book reported August 3.
That said, new-car prices still carry a premium for the most part.
The average price of a new vehicle sold in July was $38,378, up 2% from a year earlier but down 1.2% from June, according to Kelley Blue Book.
Average July used car list prices, by vehicle segment, ranked by price change (with the increase from June in parentheses):
• Large pickup: $33,264 (up $2,301)
• Midsize truck: $29,457 (up $1,812)
• Sports car: $24,867 (up $1,369)
• Large SUV: $37,942 (up $1,094)
• Large car: $22,446 (up $1,060)
• Subcompact car: $13,214 (up $841)
• Midsize SUV: $24,766 (up $803)
• Midsize car: $16,709 (up $520)
• Subcompact SUV: $17,169 (up $516)
• Compact SUV: $18,949 (up $512)
• Heavy-duty pickup: $43,044 (up $491)
• Compact car: $14,859 (up $427)
• Minivan: $21,727 (up $415)