There has been a perfect storm brewing in the used pickup truck market, and conditions are only beginning to intensify. With the new vehicle shortage, used pickup truck prices are going off the rails. Will things calm down soon?
Used pickup truck prices are continuing to climb
Before you go all-in on that used Toyota Tacoma or used Ford Ranger, slow down and look at the prices. Used picking truck prices are continuing to climb, and they most likely haven’t met their peak.
According to the used automobile wholesaler, Manheim, the average wholesale price for a used truck increased to $30,093 in mid-April. This price increased from $28,121 in May and from $17,201 compared to last April, when the industry was overstocked during the ongoing Coronavirus (COVID-19) outbreak,
The ongoing semiconductor chip shortage and the rising demand for new vehicles as the economy attempts to recover are causing a rampant increase in used vehicle prices. Pickup trucks have the most substantial price increase.
Jonathan Smoke, Manheim Chief Economist, shared that we may see the price increase reflected in retail prices in about six to eight weeks. This is the most extreme supply and demand imbalance that you can imagine.
How long will used truck prices be high?
The reopening of the economy, improving customer sentiments, stimulus checks, and tax refunds contribute to increased demand. The average price of a used pickup truck is now hovering around $19,094 compared to $12,548 last year.
But things might be better if you want a used car instead. Smoke expects to see the rise in values begin to hit its peak around July. Then prices may steadily return to normal. So, the vehicle prices could be pretty steep for a few more months.
According to the Wall Street Journal, Ford Motor Company will extend factory shutdowns in five North American sites due to the ongoing global semiconductor shortage. This will continue to delay the production of the 2021 Ford F-150 and other significant moneymakers.
The closures will continue for two additional weeks until May 14. Another SUV in Ontario will also experience another week of downtime. The most recent shutdowns impact production of the Ford Explorer and Transit vans.
Is Ford alone?
It doesn’t matter which used pickup truck you’re after. The auto industry is being hit across the board. General Motors, Toyota, Volkswagen, and Stellantis have adjusted their halted production due to the computer chip shortage.
Analysts estimate that the chip shortage could cost the auto industry tens of billions of dollars in 2021. Hourly workers at Stellantis, GM, and Ford factories in the United States ate being represented by the United Auto Workers union.
They are being placed on layoff status during the unscheduled factory closures. Workers will receive unemployment benefits and supplement pay under their labor contracts. President Biden is using this opportunity to pitch his $2.3 trillion infrastructure plan.
The goal of this plan is to partly bolster high-tech manufacturing. Biden will hear directly from companies about the impacts and what they need to get through this period. But expanding domestic production in crucial areas may decrease the country’s risk of critical product shortages.