What’s Up? Used Car Prices and Demand

This May be the Time to Finally Sell Your Car.

Graph showing used car prices are 28% higher than they are this time last year, with the average price at $27,608.

Used car prices are on the rise, but with inventory still below pre-COVID levels, demand is still just as high. 

The average used car price rose continually for the past five years, and especially so since the start of the pandemic. The over-stretched marketplace mostly caused those increases.

Let’s get in to what all that means, and more importantly, what it means for you:

Used Car Prices Are Up, Inventory Down.

The Market Watch logo featuring an icon of a line graph inside of a magnifying glass.Used car prices are 28% higher than they were this time last year (according to VehicleRemarket.com and Cox Automotive). In March, the average used car listing price dropped to $27,608 after topping out at $28,000 in December. 

And sales are heating back up after a cool February. Used car sales were 104,000 units higher the last week in February than the week before. The February dip provided a little relief in demand, giving the marketplace 5% more used car inventory than in March 2021. But even with an uptick in inventory, used car availability is still far from reaching pre-COVID levels. 

And it’s likely supply doesn’t catch up with demand any time soon. The IRS is working its way through a backlog of tax filings, having issued nearly $171 billion in refunds as of March 18. And returns that would have been spent to new cars will likely be spent on used cars due to manufacturing delays.

New Car Supply Is Lagging Behind Demand.

Many people are turning to the used car market because the demand for new cars far outpaces the current supply.

New car inventory is down for a number of reasons, beginning with manufacturing shutdowns caused by COVID. And while car manufacturers were shutting down, so were their parts suppliers. There are lots of moving gears in the supply chain, and it takes a while for them to crank back up. 

For instance, Mazda shut down two Japanese factories for two days because of a lack of auto parts. This was due in large part to spiking COVID cases in China, and ultimately will result in two-fewer-days worth of Mazdas in the already depleted new car marketplace. 

Plus, there is a new wrinkle in the supply chain. Just as vehicle manufacturers are reopened, many of the key parts and raw material suppliers in Europe are being disrupted by Russia’s invasion and corresponding war in Ukraine. Additionally, transportation is made increasingly difficult by the war itself and the rising fuel prices it has caused. 

Here’s the cherry on top. The shortages have led to waitlists and dealerships charging well over sticker price across the country, pushing even more buyers to the used car market.

What Do Used Car Prices Mean For You?

If you’ve been thinking about selling your car, used car prices are at an all-time high and demand is only poised to go up. That means there are a lot of people willing to pay higher prices for used cars. Consider shopping around for a price, or list it on Carmigo.io and we’ll shop some prices for you.