Why are Used Car Prices Back on the Rise?

The past few months have been a sellers’ dreams for used cars. The fear of COVID-19 has left many people avoiding public transportation as much as possible. That also means those people are in need of affordable transportation. Even though there are a handful of new cars that are budget-friendly, they come nowhere close to the low price that some reliable used cars can be. With demand on the rise, the price has risen to, and the pandemic isn’t the only reason car buying has been more tedious than usual.

Supply and demand

Over the past few months, more and more people have been in the market for a used car. Whether it’s because of layoffs or factory closures, the demand for brand new cars isn’t as strong as many companies were expecting in the first two quarters of the year. People haven’t just stopped needing cars, however, and that has meant a spike in the used car market. Higher demand means more and more people are buying up options on the used market.

Used car showroom, United Kingdom | Steven Miric/Construction Photography/Avalon, Getty Images

A top in the supply chain

To makes matters more strained, many factories and car dealerships had to shut down for weeks or even months. While that negatively affects the manufacturers, it also means there were far fewer cars produces this year than intended. This is more obvious in lower production cars like the mid-engine Corvette C8, where you would struggle to even find one for sale, but it is still a problem for more common cars as well.

A car dealership offering used Chevy Tahoes
Used Chevy Tahoes for sale at a car dealership | Scott Olson/Getty Images

Used cars are still cheaper

While the cost of a lot of used cars is on the rise, they are still cheaper than buying a car brand new. In fact, buying a used car is a great way to get a luxury car, like a Porsche Cayenne, or even a higher-end sports car like a Bentley Continental, after depreciation has brought the cars down to more affordable prices. There are a lot of reasons why buying a used car is a good option for consumers, but with prices on the rise, it has a lot of buyers compromising.

Toyota certified used Vehicles loan advertisment at Roger Toyota car dealer | Francis Dean/Corbis, Getty Images

Consumer Reports Tips To Avoid Buying A Lemon

Regardless of rising prices, used cars will almost always be more affordable than their newer counterpart — with the exception being collector vehicles. The price of pre-owned may have spiked, but the price of 2020 models will only go down from here, making both great options depending on your budget and what you’re looking for.