Shortage pushes U.S. used-vehicle prices up 30%
As the Great Microchip Drought of ’21 continues to limit the supply of new vehicles worldwide, American consumers are increasingly turning to the used-vehicle market. Inevitably, that market is heating up: average prices are up 30% over 2020. Some used vehicles are even selling for more than the original sticker price.
“The market is very strange right now,” says Alex Yurchenko, Senior VP of Data Science at Black Book, the automotive data analysts who figured out the overall price increase.
More specifically, Black Book also found 73 models of used vehicles between one and three years old which were auctioned to dealers for prices exceeding their original sticker price, i.e. the recommended retail price (RRP) as suggested by the OEMs. “Dealers need the inventory, so they’re paying lots more money for their vehicles on the wholesale market,” Mr. Yurchenko told AP.
The models in question included not just high-value trucks and SUVs, such as the Ford F-150 Raptor pickup (pictured); but also more mid-market models, such as a Toyota Tacoma SR double-cab pickup. Originally priced at $29,000, it sold for almost 30,000 earlier this year.
Things get ‘crazier’
And things will get ‘crazier’ before they return to normal, with Black Book predicting more mainstream models getting closer to, or even going beyond the RRP in the coming weeks and months.
The rising temperature of the used-vehicle market in the United States is the result of several interrelated factors, including widespread factory closures in 2020 and the global shortage of microprocessor chips for the automotive industry in 2021 – both the result of the pandemic; and strong market demand for vehicles, a consequence of the economic rebound, now that the worst of the crisis seems over.
In May alone, used-vehicle prices in the U.S. climbed 7.3% and were responsible for one-third of total inflation. Since many of the factors pushing up used-vehicle prices are not limited to the U.S., the phenomenon can be observed in other regions too, notably certain European markets.
However, the wave may have crested in the U.S., with weekly used-car prices in week 24 increasing by just 0.75%, the lowest weekly rise in four months, according to Black Book.