The used car market is booming.
The average cost of a used car or truck has surpassed $20,000, a 10% increase over the past 12 months.
The surge may not be slowing down anytime soon due to low supply and high demand issues in the automobile industry. Cox Automotive, which owns Kelley Blue Book and Autotrader.com, estimates that demand for used vehicles has doubled since last March.
Rental car companies struggled in 2020 because of the pandemic and as a result Hertz
Enterprise and others bought fewer new cars — and sold more of their existing fleets. In addition, recent production issues for many automakers, and an influx of federal stimulus checks to Americans, caused used car prices to spike.
“If you have an extra car to sell, it’s a great time — there may never be another time greater than this,” Eric Ibara, director of residual values at Kelley Blue Book, recently told the Los Angeles Times. “But if you’re selling a used car to buy another car, it could be difficult. I’ve been in the industry 30 years now and I have never seen the market as hot as it is.”
Buying a used car is obviously a cheaper alternative to buying a new, similar type of car. According to data from auto-research firm Edmunds, earlier in 2021 the average cost of a new car surpassed $40,000 for the first time.
The increase in demand for used cars comes at an uncertain time for many automakers. Companies including General Motors
Toyota Motor Corp.
can’t find enough computer chips for new cars, slowing production.