Used Car Prices Are Finally Going Down, but Don’t Celebrate Yet
The market for used cars has been, quite frankly, insulting. In general, the price of used vehicles is up substantially thanks to supply-chain issues and the worldwide chip shortage. Though there seemed to be light at the end of the tunnel, Russia’s invasion of Ukraine is fueling the shortage. Ukraine is the world’s largest supplier of neon, which is needed to create semiconductors.
Against all odds, March 2022 saw a slight drop in the cost of used cars
According to Motor1, the overall price of used cars dropped by about five percent. Though that may not seem like much in the grand scheme of things, for some, five percent is everything. Could this be significant and point toward a downturn in the price of cars, or is it just a fluke?
Considering the continued supply-chain issues, the world is not likely to see a substantial drop in the used car market any time soon. Despite the month-to-month drop, March still saw the used car market sit 30.4 higher than pricing in March 2021. That’s a bit of an improvement over February’s 35 percent increase year over year. However, it definitely does not signal an end to inflated prices.
The average price across all used cars for March 2022 was $34,429. So, considering the 30.4 percent increase over last year, that means the average went up $8,032 since March 2021. Putting it in a perspective of dollar figures really sheds light on how crazy the increases have been.
Lamborghini recently announced that, despite its preferences for its dealers not to sell cars at a markup, its models are trading for 140 percent of MSRP. Additionally, the Mercedes G-class saw a massive year-over-year jump of 48 percent. Put into a dollar figure, that means a used G wagon could fetch $71,586 more than in March 2022.
Despite luxury and exotic cars having some insane markups right now, the vehicles with the most substantial percentage increase are undoubtedly small economy cars, hybrids, and electrics.
The car affected most by price increases was not a luxury or sports car
The most substantial percentage increase of a used car in March 2022 compared to March 2021 was the Hyundai Sonata Hybrid. It saw a 63.9 percent increase. In terms of dollar amount, that’s $9,991. It does make sense that the citizens would turn their eyes toward one of the most fuel-efficient and affordable hybrids on the market.
It wasn’t just the Sonata, either. The website iSeeCars provided the data used in Motor1’s article, and their executive analyst Karl Brauer gave some insight on the situation at hand.
“We are also seeing a significant increase in demand for used hybrid and electric vehicles as a result of high gas prices, with the cost of hybrids increasing by 40.5 percent and electric cars increasing by 36.3 percent compared to last year,” said Brauer.
The continued record-breaking sales for Tesla despite substantial price increases is a perfect example of this sentiment.
Unfortunately, there’s no sign of a substantial decrease in the used car market at this time. Hopefully, though, things eventually work their way back to normal.