The average price of a used car dipped slightly from the end of December through to the end of January as dealers received more inventory and demand eased.
According to Cox Automotive, the average transaction price for a used car last month stood at $27,633 – down from $28,193 in December 2021. The average time a used vehicle spent on a dealer lot before being sold also rose from 51 days in December to 56 days in January, suggesting that consumer demand for second-hand vehicles is beginning to cool off after reaching record levels last year. The total supply of used vehicles also rose from 2.38 million units to 2.55 million units.
Despite this slight month-to-month improvement, Cox Automotive senior economist Charlie Chesbrough expects used car prices to shoot back up as consumers begin to receive their tax returns and as nicer weather arrives this spring.
“Used vehicles are starting to see some inventory build-up ahead of the prime selling season as tax refunds come in,” Chesbrough concluded. “The inventory volume and days’ supply are both above last year, though sales remain low. Spring should see strong demand.”
Earlier this month, GM Chief Financial Officer Paul Jacobson said he expects auto production output to improve in 2022 as more chip supply becomes available. A shortage of new vehicles affected used vehicle supply last year, as fewer owners were trading in their used vehicles for new ones.
“We saw improved semiconductor availability in the fourth quarter compared to the third quarter, which enabled us to increase our wholesale sequentially while substantially reducing our inventory of vehicles built without certain components, and we expect ongoing semiconductor availability improvements throughout 2022,” Jacobson said previously.
GM CEO Mary Barra is also confident the chip supply will improve drastically this year, saying this month that “with the plans we have in place now, by the time we get to third and fourth quarter, we’re going to be really starting to see the semiconductor constraints diminish.”
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