Мобильный 1 Add news
March 2010
April 2010
May 2010June 2010July 2010
August 2010
September 2010October 2010
November 2010
December 2010
January 2011
February 2011March 2011April 2011May 2011June 2011July 2011August 2011September 2011October 2011November 2011December 2011January 2012February 2012March 2012April 2012May 2012June 2012July 2012August 2012September 2012October 2012November 2012December 2012January 2013February 2013March 2013April 2013May 2013June 2013July 2013August 2013September 2013October 2013November 2013December 2013January 2014February 2014March 2014April 2014May 2014June 2014July 2014August 2014September 2014October 2014November 2014December 2014January 2015February 2015March 2015April 2015May 2015June 2015July 2015August 2015September 2015October 2015November 2015December 2015January 2016February 2016March 2016April 2016May 2016June 2016July 2016August 2016September 2016October 2016November 2016December 2016January 2017February 2017March 2017April 2017May 2017June 2017July 2017August 2017September 2017October 2017November 2017December 2017January 2018February 2018March 2018April 2018May 2018June 2018July 2018August 2018September 2018October 2018November 2018December 2018January 2019February 2019March 2019April 2019May 2019June 2019July 2019August 2019September 2019October 2019November 2019December 2019January 2020February 2020March 2020April 2020May 2020June 2020July 2020August 2020September 2020October 2020November 2020December 2020January 2021February 2021March 2021April 2021May 2021June 2021July 2021
News Every Day |

Why used cars are so expensive now - and when prices may drop

Cars sit outside a used car dealership with spray paint on the windows advertising the vehicles.
Used car and truck dealers have bought models for more than their original sticker price.
  • Used-car prices have skyrocketed over the last year.
  • A supply crunch in new cars is spurring demand for used models.
  • Prices may not return to normal for at least a year, one expert told Insider.
  • See more stories on Insider's business page.

If you're looking to get a sweet deal on a used car to take advantage of the warm summer weather, it's not going to happen.

The market for secondhand cars is absurdly and unprecedentedly hot right now. Used vehicles went for a whopping 40% more in June than they did before the pandemic in February of 2020, according to data from JPMorgan.

The average nine-year-old car changed hands for $13,250 in June, according to automotive research site Edmunds. That's a 30% hike over the same month in 2020, while a five-year-old vehicle will run you a staggering $24,000 - up more than $6,000 from a year ago.

The insanity all comes down to simple economics: demand for used cars far outweighs their supply, pushing prices higher and higher. But the reasons for scant inventories and such high interest in used cars get a bit more complicated.

Why are used cars so expensive right now?

The market for used cars is deeply intertwined with the market for new ones, says Kayla Reynolds, an analyst at Cox Automotive. The latter is going through a rough patch, and those troubles are trickling down into the used market.

A devastating shortage of microchips - which are necessary for all manner of critical electrical components - is slowing car production worldwide, choking the supply of new models and driving their prices skyward. High dealer markups and a lack of options are forcing more buyers to shop secondhand, chipping away at used-car inventories, Reynolds said.

To put the magnitude of this shortage into perspective, new-car inventory in the US was down 54% in June as compared to the same month in 2019, according to Cox. Dealer incentives have plummeted and transaction prices for new cars have hit all-time highs as a result.

That's bringing a whole new set of customers to the used market, people who were prepared to spend serious money on a brand-new set of wheels and are, in turn, driving up used-car prices, says Ivan Drury, senior manager of insights at Edmunds.

Read more: Meet 9 former Tesla execs who left Elon Musk to become power players at rivals like Apple and Rivian

A drop in new cars rolling off assembly lines has upended the flow of vehicles to and from rental agencies, which are typically a major source of used inventory. Rental companies, which sold off cars en masse during the pandemic, usually buy some 2 million new cars every year and turn them over every 1-2 years, Drury said.

With travel surging back, they've resorted to snatching up used cars - and they're not giving them up.

Moreover, with new-car prices through the roof, people are holding onto their aging vehicles longer instead of trading them in, cutting off the flow of cars onto the used market. For the same reason, they're opting to buy their leased vehicles at the end of the term, rather than swap them in for a new lease.

When will the madness end?

There is good news. Prices seem to have peaked in May and are heading back to Earth.

Between May and June, wholesale car prices declined for the first time since December, suggesting that demand and supply are on a path toward some kind of equilibrium, Cox's Reynolds said.

She expects that retail prices will soon follow, and that shoppers will start to notice prices on car lots gradually dropping by the fall. The pandemic-induced car-buying frenzy tapering off partially explains the shift, she said.

But the supply crunch brought on by the chip shortage isn't going away anytime soon, meaning it could be quite a while before shoppers see used-car prices they're accustomed to. Even once new models are back in stock, the secondhand market won't snap back to normal overnight, Drury said.

His advice to car buyers: "I'd say give it at least six months. And in all honesty, if you can hold off for an entire year, you're better off with that."

Are you a car dealer, buyer, or private seller with a story to share about what it's like to buy and sell cars in this red-hot market? Contact this reporter at tlevin@insider.com

Read the original article on Business Insider

Read also

Some Fans Feel They Got An A Trade, Some Feel B Trade

Infrastructure bill advances on 67-32 Senate vote

Packers’ Aaron Rodgers looks thrilled to be reunited with Randall Cobb

Слот 7

News, articles, comments, with a minute-by-minute update, now on Today24.pro

News Every Day

Fishing for Redneck Lobsters Catch Clean & Cook

Today24.pro — latest news 24/7. You can add your news instantly now — here


Трем работникам ГКУ МО «Мособлпожпас» присвоена квалификация «пожарный 1 класса»

Новости России
Game News

9 Лучших Вещей Которые Нужно Делать Перед Тренировкой


Каковы темпы вакцинации в разных регионах России

Губернаторы России
Антонина Арталевская

Онлайн-платформа расскажет «Достоверно о здоровье» 

Всероссийский турнир по боксу на Кубок командующего ВДВ прошёл в Пскове

Спрос на торты в Калининграде вырос на 94%

Наш «Спутник» завоевывает мир!

Человек погиб при пожаре в центре Москвы

«Прогнили до корней»: дочка Юлии Началовой вступилась за внучку Долиной

"Обшарила мне в спальне все тумбочки, нашла фаллоимитатор!" Волочкова обвинила Собчак в зависти (Видео)

Певица Шакира может сесть в тюрьму за неуплату налогов


Маркета Вондроушова: Жаль, что Бадосе стало плохо, но так у меня будет больше времени для восстановления

За явным преимуществом: Медведев и Павлюченкова уверенно вышли в третий круг на ОИ в Токио

Почему на «Уимблдоне» играют только в белом?  (7 фото)

Яна Носкова одержала победу над Притикой Паваде в первом матче турнира по настольному теннису на Олимпиаде в Токио

Матч "Спартака" и "Бенфики" в Лиге чемпионов обслужит бригада судей из Испании

В Мордовии росгвардейцы отработали сопровождение воинского груза в ходе учения «Заслон-2021»

«Готовы к новым победам»

Booking.com поделилась списком самых популярных городов, которые россияне выбрали для путешествий в июле

Эрдоган придумал как вторгнуться на Кавказ и не получить от русских

Итоги визита Мишустина в Хабаровский край

Экс-глава МИД Дании предложил Западу усложнить запуск "Северного потока — 2"

Почему на кухнях в Америке над кухонной плитой микроволновка, а не вытяжка

Путин в России и мире

Персональные новости