The average advertised price for a used car, truck, crossover or SUV in July 2021 exceeded $25,000.
According to data compiled by market research firm Kelley Blue Book, the average advertised price for a used car in America at the end of July sat at $25,500. This is 28 percent higher than in July of 2020 and is the result of recurring month-to-month price increases for used vehicles, which have largely been spurred on by a lack of new vehicle inventory due to the COVID-19 pandemic and semiconductor chip shortage.
While used car prices currently sit at an all-time high, KBB expects demand to cool off in the coming months. Limited inventory and high prices are convincing some would-be buyers to hold onto their vehicle, but at the moment, there are still more prospective buyers than there are weary ones.
“For consumers, finding a used vehicle at an attractive price represents a huge challenge in today’s market,” said Charlie Chesbrough, a senior economist with KBB’s parent company, Cox Automotive.
“Sales have been slowly falling in recent months due to limited availability and high prices, but not enough to chase off prospective buyers,” Chesbrough added. “The even more pronounced lack of new vehicles is forcing shoppers into the used market, and so even more buyers are chasing fewer vehicles. The situation is unlikely to improve significantly until the supply issues in the new market start to improve.”
Unsurprisingly, the least expensive vehicles are the hardest to find at the moment. Many 10 plus year-old vehicles sell for under $10,000 typically, however these vehicles can be hard to come by due to low production output amid the 2008 recession and in the years following the economic downturn. This has compounded with higher-than-usual demand to make sub-$10k vehicles very hard to come by in the current day.
“Trends pass through the used market years after they affect the new car market,” KBB said. “A lull in new car sales after the 2008 recession has left fewer higher-mileage, older vehicles available to used car buyers.”
While used vehicle demand is showing some signs of cooling off, the higher prices will likely last into 2022 as automakers continue to balance their production output with the semiconductor chip shortage.