DETROIT — A couple of months ago, a woman paid a visit to Jeff Schrier’s used car lot in Omaha, Neb. She was on a tight budget, she said, and was desperate...
Prices for used cars are soaring so high, so fast, that buyers are being increasingly priced out of the market.
, was $29,011 — a dizzying 39% more than just 12 months earlier. And for the first time that anyone can recall, more than half of America’s households have less income than is considered necessary to buy the average-priced used vehicle. The blame can be traced directly to the pandemic’s eruption in March of last year. Auto plants suspended production to try to slow the virus’ spread. As sales of new vehicles sank, fewer people traded in used cars and trucks. At the same time, demand for laptops and monitors from people stuck at home led semiconductor makers to shift production from autos, which depend on such chips, to consumer electronics.
“What used to be a $5,000 car,” he said, “is now $8,000. What used to be $8,000 is now $11,000 or $12,000.” “People are going to have to make hard decisions, maybe cut back in other areas,” Palmer said. “It means that it’s stressful for a lot of families.” “If I didn’t take it,” Hogan said, “there were three people waiting. I couldn’t get any off, but I wanted a new truck.”
Given pent-up demand from consumers, prices for new vehicles are expected to remain historically high until the supply returns to around 2 million or 2.5 million and automakers resume discounting, which could take well into 2023. Once new vehicle prices do ease, the pressure on used-vehicle prices will eventually follow.
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