DETROIT (AP/CBS News) – High demand and low supply have driven up used vehicle prices so much that many are now selling for more than their original sticker price when they were new.
The auto research firm Black Book found 73 models of 1- to-3-year-old vehicles with prices higher than the original sticker, even though they’re used. It’s all because of factory shutdowns last year at the start of the coronavirus pandemic and a worldwide shortage of computer chips that have forced auto production cuts.
Black Book Senior Vice President of Data Science Alex Yurchenko says used vehicle prices are up 30% in the past year.
He says the high prices will stay until the chip shortage ends, and that date is unknown.
When it was new, the window sticker price on a typical 2019 Toyota Tacoma SR double cab pickup was just under $29,000. Two years later, dealers are paying almost $1,000 more than that to buy the same vehicle, even though it’s used. Then they’re selling it to consumers for more than $33,000.
Welcome to the wacky world of U.S. car and truck sales, where the pandemic and a global shortage of computer chips have pushed prices to record levels.
Used vehicle price increases accounted for one-third of the large rise in inflation last month, according to the Labor Department. Prices shot up a record 10% in April and another 7.3% in May, as inflation spiked 5%, the biggest 12-month increase since 2008. The average used vehicle cost $26,457 this month, according to car market tracker Edmunds.com.
“Rising used car prices are a trend that we noticed last summer, and it has really intensified in the past few weeks,” Jessica Caldwell, executive director of insights at Edmunds told CBS MoneyWatch in May. “You hear numbers that, honestly, I wouldn’t pay [$20,000] for a Maxima, especially with that many miles on it. We are seeing bizarre things.”
Many of the models Yurchenko found were high-priced trucks and SUVs or highly sought-after loaded-out vehicles, including the high-performance Ford F-150 Raptor pickup, the 2019 Jeep Wrangler Unlimited Rubicon SUV and the boxy Mercedes G-Class AMG63 high performance SUV.
But the two-wheel-drive Tacoma SR is the lowest-priced model of Toyota’s top-selling small pickup. To be sure, higher end versions of the Tacoma also were on the list, but even more mainstream vehicles are selling for more than their original prices. For instance, the 2020 Kia Telluride and Hyundai Palisade made the list even though both are considered good values compared with more expensive SUVs with three rows of seats.
Yurchenko says the crazy prices are moving further into more ordinary vehicles. “Before we get through this, prices for many mainstream vehicles will get closer to their manufacturer’s suggested retail price,” he said.