Back in June, the average used car price listing surpassed $25,000 for the very first time, a true milestone in a year that’s been full of them. As the semiconductor chip shortage continues to wreak havoc on new vehicle production, consumers are scooping up used vehicles instead, which is driving down inventory and causing prices to set new records with each passing month. And now, according to new data from Cox Automotive, that trend continues as the average used car price listing set a new record at $25,500 in the month of July.
Used car prices have risen steadily since 2020, jumping up 28 percent year over year at the conclusion of July and 32 percent over 2019. However, there are signs that conditions are beginning to improve. At the end of July, there were 2.44 million used vehicles on dealer lots, compared to 2.4 million one month prior. Inventory was 12 percent higher than July of 2020, while days’ supply improved from 40 to 42, which is also 21 percent more than last year.
“For consumers, finding a used vehicle at an attractive price represents a huge challenge in today’s market,” said Charlie Chesbrough, Cox Automotive senior economist. “Sales have been slowly falling in recent months due to limited availability and high prices, but not enough to chase off prospective buyers. The even more pronounced lack of new vehicles is forcing shoppers into the used market, and so even more buyers are chasing fewer vehicles. The situation is unlikely to improve significantly until the supply issues in the new market start to improve.”
These comments mesh with what most in the industry are saying these days – even the used vehicle market will continue to suffer from low inventory and high prices until the chip shortage is over, and even when that eventually happens, it will take some time for automakers to catch up with demand for new vehicles.