Used vehicle prices, already sky high, will continue to rise, according to a new report.
Per an analysis from online automotive information company Edmunds, the average transaction price (ATP) for used vehicles in Q2 of the 2021 calendar year was up to $25,410, the highest-ever quarterly used ATP on record for the company. By comparison, used vehicle ATP in Q1 of the 2021 calendar year was $22,977, and $20,942 in Q2 of the 2020 calendar year.
“Tighter inventory and fewer discounts in the new car market are pushing shoppers to seek a reprieve in the used market, and this consumer behavior is what’s also driving used car prices to astronomical levels,” said Edmunds’ executive director of insights, Jessica Caldwell. “Car shoppers are used to getting deals, and often far below the sticker price for new, so anyone returning to the car market for the first time in a while is in for some serious sticker shock.”
However, unlike used vehicle prices, Edmunds states that the ATP for new vehicles is stabilizing, measured at $40,827 in Q2 of 2021. By comparison, the new vehicle ATP in Q1 of 2021 was set at $40,070, while the new vehicle ATP in Q2 of 2020 was set at $38,895.
Edmunds also provided insight with a breakdown of vehicle segment percentages. Critically, the pickup segment dropped to 17.1 percent in Q2 of 2021 (versus 22 percent in Q2 of 2020), while the percentages for SUVs and passenger cars increased, with SUVs up to 54.6 percent in Q2 of 2021 (versus 51.3 percent in Q2 of 2020), and passenger cars rising to 23.8 percent in Q2 of 2021 (versus 23 percent in Q2 of 2020).
Edmunds states that low pickup inventory is the influencing factor here, pushing consumers to SUVs and passenger cars instead. What’s more, Edmunds says that those car shoppers still buying are likely more affluent.
“This is not a buying environment for people on the fringe of being able to afford new car ownership,” Caldwell said. “Average loan terms are already quite long and interest rates are relatively low on average, so the consumer really has to make up the difference in price.”
It’s advised that buyers looking to buy a vehicle maximize their trade-in value to take advantage of the sky-high used vehicle prices.