Used car prices have been going up for quite some time. A few factors, such as reduced car production, lowered purchasing power, and good vehicle maintenance
, have attracted a sizable market to buy used cars
, pushing up their prices. How long will we wait until prices start coming down again? Let's explore the factors that may determine the price of used vehicles in 2022 and beyond.
Inventory shortages will continue to increase prices for used cars
The auto industry has been reeling from chip shortages and a lack of other parts since the COVID-19 pandemic began. Unfortunately, the factors of the product make it hard for chip manufacturers to increase production within a short time.
This means that the inventory shortages are likely to go on for the rest of the year and only ease by mid-next year.
According to Zerosum
, new vehicle inventory has been low at 62% year-over-year, increasing by December 2021. The inventory levels rose by 6% between December 2021 and January 2022 and another 1.7% by February. However, used car inventory is low, at 3.5% year-over-year. Therefore, this could alleviate the pressure on used car prices. Unfortunately, the slow recovery would mean that it would take time before the full effect is realized in the market.
Used cars wholesale prices are falling
The prices of used cars for dealers started declining in January. According to Kelly Blue Book
, despite wholesale used car prices rocketing by 43% a year earlier, they have receded in the first quarter of this year. After the initial decline in January, February saw another reduction, with only the vans going up.
Unfortunately, the supply of used cars for sale has gone down since the start of March. If the situation does not change throughout March and April, the prices could gradually go up, which would mean higher prices for used car buyers later in the year.
Presently, shoppers are yet to enjoy lower prices as general used car prices have risen by around 1% in February compared to January. This is a whopping 38.5% higher than the same period last year. This complicated web of inventory and prices will prevent used car prices from going down.
MORE: Are Many People Buying Cars Now? Half of the Likely Shoppers Wait for the Chip Shortage to Subside
How long will the high prices last?
Car and Driver
estimates that the average wholesale prices for used cars will have dropped by about 9% by the fourth quarter of 2022. Lower prices will have a substantial effect on their prices. Second, manufacturers are upping their game and production levels while allowing people to pre-order straight from the factory. This will draw in car buyers looking for new vehicles, thus easing the pressure on used vehicles.
Besides, some customers are looking at more efficient, low-emission vehicles like EVs. Most of the newer models are more efficient than their used car counterparts. This could also lower prices.
However, the time it takes for the prices to go down may not be certain, since it depends on more than one variable. One thing is clear, though: used cars will be selling for less by the end of the year.
Get the best price for your used car insurance
Get affordable insurance coverage for your used car. Consider comparing a few quotes to see which offers the best mix of broad coverage and price before picking the best.
The Jerry
app may help you find a cheap insurance policy by comparing offers from many providers on the same platform. It also shares lots of insurance-related information to help you determine the best coverage. 
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