Surging Used Car Prices May Finally Be Starting to Fall
August 2, 2021
During the pandemic, people hesitant to use public transportation opted to buy used cars. Then came the semiconductor shortage, creating a bottleneck of how many new cars manufacturers could produce. This high demand and low supply have sent used car prices skyrocketing in recent months. Now, those prices may start coming back down to earth, according to one retailer.
The average price for a used car was $25,410 in the second quarter of 2021, up from $22,977 in the first quarter, according to data from Edmunds. That is the highest average price on record and a staggering 21% increase year-over-year.
However, that price pressure may finally be coming to an end, according to Jeff Dyke, president of Sonic Automotive, one of the nation’s largest car retailers.
In an interview with CNBC, Dyke said that used car prices dropped by as much as $2,000 in July. He attributes the fall to increasing inventories of new cars, a trend he expects to continue throughout the year.
As more stock of new cars becomes available, buyers are likely to take advantage of trade-in opportunities, increasing the availability of used cars as well. The average trade-in value of a used car was $21,224, a 75.6% increase year-over-year, according to Edmunds. In comparison, the average new car bought in the second quarter cost $40,827, a 5% year-over-year increase.