Will Used Car Prices Rise Due to a Lack of Inventory?
Most automakers like Toyota and Hyundai showed record car sales for the first quarter of 2021, especially in comparison to 2020. Also, new car sales are up. As we move through the second quarter, will used car prices continue to rise? Experts think so.
Hyundai, Kia, Toyota reported record car sales
According to Automotive News, both Hyundai and Kia had quite the month. In March, volume rose 47% to 66,523 units sold. That was a 16% rise for the quarter. For Hyundai, volume rose an astonishing 115%. That was an increase to 75,403 units sold.
The Hyundai Palisade and Kia Telluride have seen an increase in popularity lately, accounting for some of the sales spikes.
For the quarter, Hyundai sales rose 28%. In addition to that, Hyundai’s Genesis brand rose 108% in sales volume. With a smaller fleet, that was 8,222 units sold. Not bad for three sedans in the lineup.
GM noted that for the first quarter of 2021, sales rose 3.7% for the company. Most notably, light trucks were moving off the lot at a quick pace. Deliveries were up 11% for GMC, 35% for Buick, and 23% at Cadillac. The one brand that dropped in sales was Chevrolet, down 1.9%.
Toyota had a huge first quarter, rising 84% for that brand and 113% at Lexus. Deliveries for the cars were up 6.4%. Honda volume was at 86% and 153% at Acura. Deliveries for the brand were up 16% overall.
New and used car prices are impacted
According to Wards Auto, used car prices are about 15% higher than at the end of 2019. In addition to used cars, new car prices remain fairly high as well. What’s the reasoning behind the high prices? A lack of inventory.
In March 2020, that number was around 73 days. For March of 2021, cars sat on the lot for around 53 days before going home. Now, automotive makers are having trouble keeping up production.
Some factories like Honda and Toyota shut down temporarily due to a few reasons. A lack of semi-conductors for the cars, a lack of workers due to COVID-19, and weather-related delays have caused production to slow.
If you are out shopping for a particular car, there is a good chance you might not find what you want, especially at the price you want. Edmunds says that inventory in the U.S. is down 36% as of March 2021.
“Edmunds analysts forecast that the average transaction price (ATP) for new vehicles will climb to $40,563 in March compared to $38,601 a year ago; the ATP for used vehicles is expected to hit $22,663 compared to $20,273 last year.”Edmunds
The issue with the chip (semiconductor) has snowballed into a bigger issue for the industry. While chipmakers cannot keep up with the demand, automakers cannot keep up with production. This is slowing down the entire process.
Are used car prices going up?
Used car prices are definitely up for quarter one. Unfortunately, new car prices are also up. Those looking for a truck might have the most trouble. Light-duty trucks have been in high demand but have generally been available.
Edmunds says that those looking for full-size trucks and SUVs might have the hardest time. According to data collected by Edmunds, full-size truck inventory was down 60% for March 2021.
The price of trucks is up about $4,000 over last year. Full-size SUV inventory decreased 56% in March of 2021 over last year, with a price increase of around $5,000.
Smaller cars and SUVs are not immune to the issue, though. Edmunds suggests purchasing a new or used car sooner than later, as inventory issues will likely continue to impact inventory through the year.