Well, it was nice while it lasted. For nearly a year, the average used vehicle in the United States had been edging toward affordable again for millions of people. The relief felt belated and relatively slight, but it was welcome nonetheless. From an eye-watering peak of $31,400 in April of last year, the average price had dropped 14% to $27,125 early this month. Now, with the supply of used vehicles failing to keep up with robust demand, prices are creeping up again, with signs pointing to further increases ahead, per the AP. So many buyers have been priced out of the new-car market that fewer trade-ins are landing on dealer lots. Deepening the shortage, fewer used vehicles are coming off leases or being off-loaded by rental car companies.
Average list prices for used car have edged up by about $700 in the past month, and Alex Yurchenko, chief data officer for Black Book, which tracks prices, expects them to keep rising at least into summer. "If you have to buy a used vehicle," he suggested, "right now would be a good time." Behind the vehicle shortage and inflated prices is simple supply and demand. Much of the problem stems from the surging prices of new cars. In February, according to Edmunds, the average new vehicle in the United States sold for nearly $48,000—beyond the reach of many consumers.
Though the supply of new vehicles has inched up, they remain relatively scarce and expensive. Automakers still lack sufficient computer chips to produce enough vehicles to meet demand, a lingering consequence of pandemic-related supply shortages. Sales of new vehicles last year were about 3 million below normal levels. Fewer new-car sales mean fewer trade-ins, which mean fewer used vehicles for sale. On used lots these days, bargains are hard to find. Even after accounting for the price drops of the past year, the average used vehicle remains about 35% above where it was before the pandemic erupted three years ago. At that time, the average price was $20,425.
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