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‘Superheated’ used car market means unprecedented competition, high prices

“It’s bonkers right now,” said a Chicago area car dealer.

Adrienne Wanek stands next to her 2002 Lexus LS 430 outside her home, Friday, May 7, 2020.
Adrienne Wanek is having trouble finding a used car to replace her 2002 Lexus LS 430.
Tyler LaRiviere/Sun-Times

Adrienne Wanek wants a low mileage 2017 Lexus sedan that offers the same reliability as the model she’s had for 20 years.

But after chatting with her trusted used car dealer, she’s come to the same depressing conclusion many people in the Chicago area have reached in the last several months: There’s never been a more difficult time to buy a used car.

“I’m thankful the dealer I’m working with was just honest about it and told me, ‘This is the absolute worst time to be shopping for a used car,’” she said.

Her car dealer, Joe Mok, owner of GMotorcars in Arlington Heights, has been trying to convince customers to hold off on buying until the red-hot used car market settles down.

“It’s bonkers right now,” Mok said.

One of the main reasons: A microchip shortage has shut down some manufacturing plants and made new car inventories very tight, so people are looking to buy used cars.

“People come in looking for a nice clean car with low miles for $10,000 or less. Well, those don’t exist anymore in this market, they’ve all been eaten up by people with stimulus and tax return money to spend,” said Mok, who, like many used dealers, has been having a hard time finding inventory.

Eric Nelson, owner of Nelson Automotive in Mount Prospect, said last year at this time he had about 200 cars on his lot. He had 43 on Thursday.

“It’s just been a roller coaster since all this took off earlier this year,” he said.

It’s not uncommon to see a used car sell at a higher price than it was sold brand new, according to Nelson and several other car lot operators.

“Even people looking to spend 3 to 5 grand, there’s just not much for sale at that range. And if there is, it’s probably not something I’d want to sell to anybody,” said Gordon Tormohlen, who runs a used car lot in Freeport and is chairman of the Illinois Independent Auto Dealers Association.

“There’s just superheated demand, and supply is really, really tight,” he said.

Average trade-in values reached an all-time high in March, climbing to $17,080, compared to $14,160 in March 2020, according to Ronald Montoya, senior consumer advice editor for the automotive website Edmunds.com.

“If dealers are buying at a higher price, they’re also selling at a higher price,” he said.

Montoya suggested anyone who can’t wait to buy a used car should expand the geographic area they are searching in, get quotes from different dealers and consider less popular vehicles, perhaps in colors they might not prefer. SUVs and trucks are super popular, he said. Sedans may be the better bet.

On another note, that’s bright for some: There’s never been a better time to sell.

“If you’re a private party selling a car, this is hands down the best time I’ve ever seen — and I’ve been in business for decades,” Mok said.