Prices For Some Used Cars Are Now Higher Than When They Were New

A lack of cars on the market is causing prices for used vehicles to rise precipitously. As the chip shortage causes dealer inventories to shrink and sales rise as consumers come out of lockdown, traditional truths about used car prices are going out the window.

Citing data from Black Book, which tracks car and truck data, the Associated Press reports that used car prices have risen 30 percent in the past year, leading to a scenario where some dealerships are paying more than MSRP for one- to three-year-old vehicles that are in high demand.

“The market is very strange right now,” Alex Yurchenko, senior VP of data science at Black Book, told AP. “Dealers need the inventory, so they are paying lots of money for their vehicles on the wholesale market.”

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Yurchenko has found that 73 models of used vehicles, including models like the F-150 Raptor and the Mercedes-AMG G63, are selling for more at auction than they did new. With dealers paying more for the cars, they obviously charge customers even more to make a profit.

It’s not all high-price, high-performance vehicles, though. Black Book found that Kia Tellurides and Hyundai Palisades from 2020 are also selling for more than their original sticker price, leading Yurchenko to think that more and more lightly used mainstream vehicles will get closer to their MSRP – especially since some dealerships aren’t expecting new vehicle shipments to rise for a while.

The rising prices are such that used vehicle price increases accounted for one-third of the large increase in inflation last month, according to the Labor Department.

Fortunately for consumers who may need a new vehicle, the rising prices seem to be slowing down. In April, used car prices rose a stunning 10 percent, but in May that number had slowed to 7.5 percent. While some dealers think that this will just be the new post-pandemic norm, Yurchenko believes that used vehicle prices will naturally deflate at some point.

“Once the new inventory levels start increasing, that’s where the pressure on the used market will be relieved,” he said.