Finding a used car or truck at a bargain price is almost impossible these days.
The cost of used vehicles has soared since the end of last year and prices are likely to stay high for a while. In the past 12 months, used vehicle prices have jumped almost 10% to mark the biggest increase in more than a decade, according to the U.S. consumer price index published on Tuesday.
How come? It’s a classic case of low supply and high demand.
There’s just not as many used vehicles for sale, for one thing. The pandemic forced rental agencies to slash purchases of new cars after a steep decline in individuals leasing cars at airport and other locations. Those vehicles typically are sold to used-car lots after a year or less.
At the same time, demand rose for used vehicles as more people avoided public transportation or moved from the cities to the suburbs to escape the coronavirus. Cox Automotive estimated that demand for used vehicles has doubled since last March.
Many Americans preferred used vehicles to save money in a time of great economic uncertainty, especially with the cost of new cars and trucks at an all-time. Earlier this year the average cost of a new vehicle surpassed $40,000 for the first time, the auto-research firm Edmunds found.
The imbalance is unlikely to end anytime soon.
Big automakers can’t find enough computer chips for new cars, for instance, and General Motors
and others have had to slow or suspend some production. That will limit how many older vehicles make their way to the used-car market.
The shortage couldn’t come at a worse time.
As the U.S. economy speeds up and fully reopens, Americans are driving and flying in greater numbers and they more willing to buy or rent a vehicle.
The recent federal fiscal stimulus, highlighted by $1,400 checks for most Americans, has also given customers more money to spend.
Yet they should be prepared for sticker shock for used vehicles. Edmunds estimated the average cost of a used car or truck now tops $20,000.