The used car market has been on fire for much of 2021 as the semiconductor chip shortage has led to record low inventory on dealer lots. Increased demand and little supply have also sent prices soaring to new record highs with each passing month, with little indication that things could change any time soon, or at least until the chip supply improves. However, new data from Cox Automotive shows that July used car sales are actually down significantly from 2020 levels.
Used car sales plummeted 18 percent from July of 2020 to July 2021, plunging from a seasonally adjusted annual rate (SAAR) of sales of 44.8 million to 36.9 million. That number also represents a decrease from June’s figure of 39 million, while total used car volume dropped from 3.2 million in June to 3.1 million in July. Retail sales also declined from 2 million last July to 1.8 million in June and 1.7 million in July.
Meanwhile, use vehicle inventory has improved slightly over the last few months, while asking prices continue to creep upward. As Ford Authority reported last week, the average list price of used vehicles reached a record high of $25,500 in the month of July, which seems to be having an impact on sales. There are other factors at play here as well, including the fact that more lessees than ever are opting to purchase their vehicles at the end of the lease term rather than turning them in.
It seems that a lot of vehicle owners are simply opting to keep their vehicles rather than shop for a new or used replacement, which makes perfect sense given the state of the market at the moment. These numbers are also an indication that used vehicle prices could begin to cool off in the coming months, though some experts don’t expect that to happen until the chip supply improves.