Amid the ongoing semiconductor chip shortage that’s wreaking havoc on new vehicle production and inventory, shoppers (and even car rental companies and dealers) are flocking to used vehicles as an alternative. This has led to skyrocketing prices, as we’ve reported extensively in recent months, with a recent study finding that used car prices were up 18 percent year-over-year as of early May. That trend doesn’t appear to be slowing down, either, according to the latest data from Cox Automotive.
That data found that in early May, used car prices reached an all-time high with an average listing price of $22,568, which is up from $21,343 at the end of March. It’s also a 16 percent increase over the same time period last year, and 15 percent higher than 2019.
“Given the strong demand from consumers, and the tight supply situation, it seems likely that used-vehicle prices, already at all-time highs, will continue to rise,” said Charlie Chesbrough, Cox Automotive senior economist. “At some point, prices will become too high, and demand will recede. But we are not there yet.”
There are some positive signs amid all this data, however. While it still remains far below 2019 and 2020 levels, used car inventory stabilized a bit in April with 2.23 million units unsold, or a 35-day supply, up from 33 days’ supply at the end of March. Additionally, analysts believe that demand could soon cool off a bit, especially if inventory continues to dwindle.
“The spring bounce we traditionally experience in used vehicles has been especially strong this year, fueled not only by tax refunds as they usually are but also by stimulus checks this year,” said Chesbrough. “The sales pace peaked in mid-April and looks to be slowing.”