There’s good news and bad news if you’re shopping for a used car. The shortage isn’t as severe as earlier in the year with inventories stabilizing in recent weeks. But used car prices began May at all-time highs.
A Cox Automotive analysis of industry data shows the average used car listing price rose to more than $22,000 for the first time ever in April, closing the month at a new high of $22,568. That compares with $21,343 at the end of March.
The average wholesale used-vehicle price — the price dealers pay — rose 4.65% in May over April’s average price. That brought the Manheim Used Vehicle Value Index (MUVVI) to 203.0, a 48.2% increase from a year ago.
Pickups in heavy demand
Compared to 2020, all major market segments saw seasonally adjusted price increases last month. Pickup trucks were in exceptionally heavy demand, outperforming the overall market. Most other major segments underperformed the overall market.
Jonathan Smoke, the chief economist at Cox Automotive, says used vehicle sales lost momentum in the first week of June, but not all of it may have been due to higher prices.
“Our estimates put used car sales down 14%, but some of the decline may have been due to the timing of the Memorial Day holiday, which landed in the previous week,” Smoke said.
Used car sales have risen sharply in recent months because of a shortage of new cars. Since the start of the pandemic, computer chips have been in short supply and nearly all automakers have had to cut back production of new cars.
Fewer new car incentives
Because of that, dealers are offering fewer incentives. For example, Smoke said the percentage of new car sales carrying 0% financing fell to 6% in May from 9% in April.
“New and used inventory levels are down substantially year over year but new is getting tighter while used continues to modestly improve,” Smoke said.
The supply of new cars and trucks on dealer lots as of May 24 was down 59% compared to 2019, the year before the start of the pandemic.
The list of the 10 used vehicles with the biggest price increases, compiled by iSeeCars.com, is dominated by pickup trucks and luxury cars. The Ram 1500’s price is up 28.8%, the GMC Sierra 1500 sale price is up 28.6%, and the Chevy Silverado 1500 is up 27.1%.
“These used vehicles have proven to be appreciating assets over the past year — a circumstance not typically associated with used cars,” said Karl Brauer, iSeeCars’ executive analyst. “Shoppers interested in these vehicles should consider holding off on purchasing them, while consumers who have these vehicles in their garage and are willing to part with them can take advantage of these significantly higher trade-in values.”