Used Vehicle Prices Are Still Totally Insane

Matt Posky
by Matt Posky

If you’re in the market for a new vehicle, you’ve likely noticed that some of the models you were interested in aren’t available in your preferred format and happen to be accompanied by sizable dealer markups. Well the used market, formerly a refuge for those seeking a bargain and a shrewd way of dodging the steepest period of deprecation, isn’t doing much better.

According to Black Book, the typical transaction price for used vehicles has gone up by over $500 in less than a month. Pegged at $27,000 in November, the average secondhand car now trades for over $27,500. As we’ve recently covered just how wild secondhand vehicle prices have become in 2021, we’ll keep this one relatively brief. But it must be said that automotive values are starting to seem totally disconnected from anything that could be considered rational as cars now have MSRPs a third higher than they were at the start of 2021.

The laws of supply and demand certainly come into play here. Pandemic restrictions kept everyone home last year, suppressing both demand and production. Rental agencies also felt the pinch, encouraging several companies to offload their inventories. But when demand returned, supply chain issues persisted and automakers failed to manufacture cars anywhere near their normal pace.

Initially, this seemed like a disaster for the entire industry. But it wasn’t long until retailers realized they could buy used cars at a premium and flip them for a tidy profit. The same was true for new vehicles, with MSRPs similarly holding strong due to elevated demand. Meanwhile, rental agencies that had previously dumped their inventories in desperation were now hoarding whatever they could find and charging lubricous rates in the process. The end result was everyone making more money per car and a consumer base that was seemingly willing to endure higher sums. But those prices have continued to swell to a point that’s starting to look less than sustainable.

Car & Driver, which first shared the Black Book data, noted that these prices are the highest on record for used vehicles and cover both franchise and independent dealers — accounting for 95 percent of all available used vehicles for sale. It also stated that other automotive entities had reached different figures while acknowledging that it made little difference in determining the general market trends.

From C&D:

Different analyst companies use different methods to count vehicles, but the trend is similar over at Kelley Blue Book. KBB’s numbers show that the current used-car inventory situation sits at 15 percent lower than it was a year ago, but the good news is that inventory is slowly starting to increase. Used car dealers in the U.S. had 2.31 million vehicles in stock at the end of November, up from 2.25 million at the end of October. Black Book found that when there are used vehicles available, they’re often newer models. The inventory of used vehicles that are up to two years old is growing faster than vehicles that are between two and eight years old.

Black Book also analyzed the prices of approximately two million vehicles listed for sale on U.S. dealer lots, specifically used vehicles that are between two and six years old. Black Book found that the price index for them has been mostly steadily climbing since the spring, with a bit of a plateau in the late summer. Since then, things have only gone in one direction.

As someone who is also looking to purchase another vehicle, it’s hard for your author to recommend anything other than waiting until the market reverts to something approaching normality. Unless you’re totally fine with paying more for a vehicle you probably didn’t want in the first place, and may well cost less in a few months, there really isn’t a benefit to buying now. Obviously, that advice doesn’t pertain to unfortunate people who absolutely must purchase a vehicle to ensure their current transportation needs are met and are being taken advantage of by the entire industry.

[Image: Gretchen Gunda Enger/Shutterstock]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Land Ark Land Ark on Dec 21, 2021

    28-cars-later: If you read this, can you pull the latest auction results for 2018 Jag XF Sportbrakes? I have my eye on one locally and it seems like it's about the only car that hasn't appreciated over the last 12 months. All of this makes me think cars were under priced. If people in great numbers are paying dealer markups at a time when supposedly unemployment is high, it seems more likely that prices will remain high as there is clearly the market ability to bear the current trend. Which ultimately is good, I guess, since manufacturers will have the ability to price EVs so they they can make a profit and people will still buy them.

    • See 7 previous
    • 28-Cars-Later 28-Cars-Later on Dec 23, 2021

      @Land Ark You're welcome.

  • Ajla Ajla on Dec 21, 2021

    I think a few of you are too much on the doom side. Production volume will eventually go up and prices on new and used vehicles will fall. I don't think it will be next year but it won't take until 2033 either. Some manufacturers might have it in their heads they can "new normal" low supply but unless their business cards say "Ferrari" it isn't going to work.

  • Ronin It's one thing to stay tried and true to loyal past customers; you'll ensure a stream of revenue from your installed base- maybe every several years or so.It's another to attract net-new customers, who are dazzled by so many other attractive offerings that have more cargo capacity than that high-floored 4-Runner bed, and are not so scrunched in scrunchy front seats.Like with the FJ Cruiser: don't bother to update it, thereby saving money while explaining customers like it that way, all the way into oblivion. Not recognizing some customers like to actually have right rear visibility in their SUVs.
  • MaintenanceCosts It's not a Benz or a Jag / it's a 5-0 with a rag /And I don't wanna brag / but I could never be stag
  • 3-On-The-Tree Son has a 2016 Mustang GT 5.0 and I have a 2009 C6 Corvette LS3 6spd. And on paper they are pretty close.
  • 3-On-The-Tree Same as the Land Cruiser, emissions. I have a 1985 FJ60 Land Cruiser and it’s a beast off-roading.
  • CanadaCraig I would like for this anniversary special to be a bare-bones Plain-Jane model offered in Dynasty Green and Vintage Burgundy.
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