The price of a used car increased 28 percent year-over-year in March as inventories remained somewhat low and demand remained high.
According to Cox Automotive, the average list price for a used vehicle last month stood at $27,246. While this was 28 percent higher than in March of 2021, it was down from February’s average of $27,609. Used car prices are also down from December’s record high of $28,193.
Used car prices will remain elevated in the coming months, although the year-over-year price increases may no longer look as dramatic due to the coming anniversary of the chip shortage, explained Charlie Chesbrough, a senior economist at Cox Automotive.
“The anniversary of the chip shortage – when prices started to skyrocket – is approaching,” he said. “Year-over-year growth rates will come back to earth. However, prices will not go negative. Rather they should return to more normal growth trends but from a higher base.”
This means that year-over-year sales data will return to more regular percentages, but that doesn’t mean vehicles will be cheaper than they once were. With little that can be done to mitigate the chip shortage in the near-term, elevated vehicle prices will remain in place for the foreseeable future. This applies to both new and used vehicles, as slower sales of new vehicles can result in a lack of used vehicle inventory due to the fewer trade-ins that dealers receive.
While used vehicle demand remains high, April’s sales were slower than some experts predicted, falling 15 percent from the same time last year. Cox Automotive chief economist Jonathan Smoke is predicting stronger used vehicle sales in April, however, as more Americans begin to receive their tax refunds.
“Used-vehicle sales will likely see a stronger April performance as the refunds continue to flow in combined with the fact that the average refund is at a new record and up 12 percent from a year ago,” Smoke said.
GM will soon launch its own used car platform called CarBravo, which will allow users to search for second-hand GM vehicles, as well as those from other OEMs. The dealer portion of CarBravo launched earlier this year, with the consumer-facing site set to go live sometime in the coming months.