You might have heard that the automotive industry is going through a bit of a supply chain issue right now. Components, including critical chips used in a variety of car systems, are hard to get from suppliers as demand is outstripping supply as the pandemic ends and industries of all types are coming back online. Couple that with the fact that car buyers are ready for new wheels after a year-plus stuck at home, and you have a very tight market for car makers right now.
The result: Empty dealership lots as far as the eye can see.
And that is having a very interesting impact on the used car market. Suddenly, that car or truck that’s been in your driveway for a few years is a hot commodity. Particularly if it’s cheap.
According to Cox Automotive, the owner of Autotrader and Kelley Blue Book, there were 17,182 vehicles costing up to $15,000 on used car lots in June, 653,948 in the $15k-$20k range and another 379,000 from $20k-$25k. That’s because buyers today want inexpensive transportation, and they don’t want to wait around for car makers to catch up with demand.
That’s why vehicles under $10,000 are selling in an average of 23.6 days (and with an average of 128,000 miles on the odometer), compared 36.1 days for all used models. In June, model year 2014 or older accounted for about 27% of used vehicles available for sale, down from 32% last year.
Quote: “This lack of older model, high-mileage vehicles is helping push the average list prices upward and well into record territory.” — Cox Automotive experts.
This isn’t only about the pandemic, though.
It’s easy to blame Covid for this, but there are actually a number of different reasons that used car prices are rising. For one thing, have you shopped for a new car lately? The average price for a new vehicle from April-June 2021 was roughly $40,000, up 5% year-over-year and a new record. Car makers are pricing themselves out of their own market and have been for years.
Couple that with rising emission standards forcing automakers to make unpopular sacrifices (such as incorporating stop-start systems that automatically shut off the engine when the vehicle is at rest to trim fuel usage), falling interest in driving by younger generations and new cars that lack the “soul” of previous models and you have a perfect formula for disinterested buyers.
The solution? Go out and get that 2013 model that you’ve always had your eye on, no matter what it costs.