Used Car Prices Are up 40% On Last Year
Used car prices have continued to rise. What exactly is going on? And how long will this trend continue?
Written by Alex Healey
Reviewed by Kathleen Flear
Table of Contents
Owing to the semiconductor microchip shortage, which throttled auto production and supply for much of last year,
used car
prices went through the roof.For a while, it appeared as though the
prices were coming back down
, but new data from the U.S. Bureau of Labor Statistics suggests otherwise. Unbelievably, the average price of a used car is now almost $30,000—40% higher than it was 12 months ago.What’s going on? And when will things return to normal?
Why are used cars so expensive right now?
MORE: New Law Would Ban Selling Used Cars With Open Recalls
The average modern car has 1,500 microchips, and manufacturers have been unable to source enough of them during the global shortage.
Consequently, auto production has been slowed, with some factories closing altogether. Not enough cars are making it to the dealer’s lot to satisfy demand, and consumers are turning to the used car market instead. This increased demand is pushing up prices.
While the microchip shortage is the root cause, prices have also been driven up by high inflation. These issues are not unique to the U.S., with many countries struggling to keep a lid on rising prices as the COVID-19 pandemic recedes.
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Used car price history
MORE: How to Safely Buy a Used Car
As detailed by
Jalopnik
, the average price of a used car is now between $28,000 and $29,500, and prices are up 40.5%, year over year. The U.S. Bureau of Labor Statistics shows seasonally adjusted price changes from the preceding month:
July 2021: 0.0%
August 2021: -1.2%
September 2021: -0.5%
October 2021: +2.5%
November 2021: +2.4%
December 2021: +3.3%
January 2022: +1.5%
It had been hoped that the lull we saw last summer represented the peak, but used car prices resumed their climb in the fall and winter months. There is some good news for buyers. Jalopnik quotes Carfax spokesperson Emilie Voss, who says “new car supply is projected to get better in the second half of the year and consumer demand has slowed recently.”
And while microchip shortages may persist into 2023, major automakers expect the impact on new car production to be far less than last year. This will also lessen the demand on the used car market.
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