[ad_1]
- Prices for used and new cars have skyrocketed during the pandemic.
- Even older used cars now cost thousands of dollars more than in February 2020.
- The average price paid for a new car reached $ 42,000 in June, up almost $ 4,000 from the start of 2020.
It wasn’t that long ago that you could buy a used but decent used car for something like $ 5,000 and hit the road.
Those days may be long gone.
Used car prices have hit all-time highs during the pandemic, and inflated prices could be here to stay at least next year, experts say.
The main culprit in all of this is a devastating shortage of microchips that has hampered the production of new cars around the world and is driving buyers into the used market.
In June, the stock of new cars plunged to just 46% of 2019 levels, according to Cox Automotive. Lower inventories and continued demand for new vehicles pushed up prices on dealer lots.
People whose prices have been shut out of the new market or who can’t find what they’re looking for due to low supply are now looking to buy second-hand, experts told Insider.
The car rental companies that normally buy new cars at wholesale have resorted to used car inventories – and they are not returning them at the same rate as before, which has a major impact on supply and the flow of lightly used cars.
All of this has inflated the demand for used cars and reduced their supply, pushing prices higher and higher. The average price paid for a used car increased by nearly $ 6,000 between February 2020 and June 2021, according to data provided to Insider by car research firm Edmunds.
If you think you can get a good deal looking at older models, you’re out of luck. Even five, seven and nine year old vehicles now cost thousands more than at the start of 2020.
Part of the problem is that people don’t trade in their aging vehicles as often as they used to because they can’t easily replace them with a new car. The average age of a car on the road in the United States reached 12 in 2021, according to research firm IHS Markit.
On the bright side, some experts believe the used car market has peaked and prices will start to drop in the coming months. The chip shortage at the heart of it all, however, could last until 2023.
[ad_2]
Source link