The market research firm says the average price of a used vehicle at the end of last month was 24 percent higher than at the end of August 2020 and 34 percent higher than in August 2019 before the COVID-19 pandemic started.
Cox Automotive also found franchised dealers had about 1.35 million used vehicles in their inventory at the end of August, down from 1.45 million at the end of July and June. Independent dealers had a total used vehicle supply of 1 million vehicles, which was up slightly from July and June. The average odometer mileage of a used vehicle sold in August was 77,842 miles.
Just as in previous months, limited new vehicle inventory is driving up demand for used vehicles, pushing prices of second-hand cars, trucks, crossovers and SUVs to never-before-seen heights. Automakers, particularly the Detroit Big Three, have dealt with recurring plant shutdowns throughout 2021 as they grapple with a severe shortage of semiconductor chips. The chip shortage is driven by an uptick in demand for silicon wafer chips of all types, along with pandemic-related production setbacks at chip plants in Asia and the U.S.
A lack of new vehicles can drive up demand for used vehicles, as more consumers are likely to turn to the used market to find the vehicle they’re looking for. Limited new vehicle inventory may also convince shoppers to hold onto their current vehicle, reducing the supply of trade-ins that dealers receive, explained Cox Automotive Senior Economist Charlie Chesbrough.
“Used sales have slowed in recent weeks due in large part to the lack of supply in the new market,” he said. “Prospective buyers unable to purchase a new vehicle and not trading in their existing vehicle limits the availability of used products at dealers.”
Used vehicles priced under $10,000 had the lowest supply at the end of August at only 30 days. Vehicles priced between $10,000 and $25,000 had between 34- and 38-day supply, while vehicles between $25,000 and $35,000 had a 42-day supply. Unsurprisingly, vehicles costing above $35,000 had the highest supply at 48 days.
Chesbrough says used vehicle ATPs will remain high, and may even increase further, “until the new-vehicle supply crisis passes.” GM has said it expects the chip supply to even out in 2022, although the industry may still observe lingering effects well into 2023.