(iSeeCars) – Used car prices are up 35.0 percent over last year as the microchip shortage continues to impact the automotive industry, according to iSeeCars.com’s latest analysis of 1.8 million used car sales in February. This is down from a 36.9 percent increase in January.
“After coming down slightly in February, used car prices remain elevated due to lingering supply constraints, and they are expected to rise again due to geopolitical factors as Russia is a key supplier of materials used to make car parts and microchips,” said iSeeCars Executive Analyst Karl Brauer. “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 46.9 percent and electrics increasing by 43 percent compared to last year.”
Although the average used car has significantly increased in price, iSeeCars’s analysis also found some vehicles have lower-than-average increases, making them smarter buys for consumers in the market for a used car. “While these used models are still more expensive than last year, they haven’t been as drastically impacted by price hikes,” said Brauer.
Top 10 Used Cars With the Greatest Price Increases
The top ten vehicles with the greatest price increases have price changes from 1.3 to 1.8 times the average vehicle’s price increase and are primarily small, relatively affordable cars and alternative-fuel vehicles. “Small cars have become the only affordable used car option for a growing segment of the population, and their price increases reflect the high demand these otherwise low-demand vehicles have experienced in recent months,” said Brauer.
|Top 10 Cars with the Greatest Price Increases (YoY) – iSeeCars February 2022 Study|
|Rank||Used Vehicle||Average Used Car Price (February 2022)||$ Price Change from February 2021||% Price Change from February 2021|
|1||Hyundai Sonata Hybrid||$24,913||$ 9,457||61.2%|
|8||Tesla Model S||$80,299||$25,825||47.4%|
|Average Across All Cars||$35,029||$9,080||35.0%|
The vehicle with the largest price increase is the Hyundai Sonata Hybrid, which had a price increase of 61.2 percent over February 2021. It’s joined by an additional hybrid vehicle, the Toyota Prius, which saw a 46.7 percent price increase. “Hybrid vehicles are in high demand due to soaring gas prices, with the hybrid category as a whole increasing in price by 47 percent,” said Brauer. “Affordable transportation has seen a surge in demand in the wake of heightened used car prices, and these hybrid cars are less expensive than the average used car.”
Five small gasoline cars make the list including the Chevrolet Spark subcompact car, the Kia Forte compact car, the Kia Rio subcompact car, the Kia Soul subcompact wagon, and the Toyota Corolla compact car. “The Chevrolet Spark and the Kia Rio are among the lowest-cost cars on the market, while the Kia Forte and Kia Soul are among the lowest-priced options in their respective vehicle classes,” said Brauer. “These vehicles, along with the always-popular Toyota Corolla, are attainable for new drivers and those looking for affordable transportation, even after with their large increase in price over the past year.”
Two electric cars make the list including the Nissan LEAF and the Tesla Model S. “The Nissan LEAF’s price increase is likely due to the surge in gas prices as well as the heightened desirability for the redesigned 2018 model, which benefitted from increased range and is now coming off lease and entering the used car market,” said Brauer. “Meanwhile, demand for used versions of the Model S waned in recent months as consumers embraced the more affordable Model 3 and the Model X SUV. But with the recent upgrades to the Model S, plus the new ‘Plaid’ model and higher fuel prices, demand has increased for the Model S.”
The Mercedes-Benz G-Class rounds out the list. “The wait time for a new version of the Mercedes-Benz G-Class is over a year, so buyers who want this opulent off-roader are turning to the used car marketplace,” said Brauer.
Used Car Price Increases By Bodytype and Fuel Type
iSeeCars further analyzed used car prices by looking at the price increases in February 2022 compared to February 2021 by body style and fuel type.
|Average Price Increase By Bodytype – iSeeCars Study|
|Bodytype||Average Used Car Price (February 2022)||$ Price Change from February 2021||% Price Change from February 2021|
|Average for All Bodytypes||$35,029||$9,080||35.0%|
The three bodytypes that have the largest price increases are wagons, hatchbacks, and sedans respectively. “Wagons, sedans, and hatchbacks have the lowest average prices among all bodytypes, which further illustrates the heightened demand for affordable transportation,” said Brauer. “Additionally, coupes and trucks were the first segments to see big price increases more than a year ago, so their increase over the past 12 months is smaller relative to other body types.
|Average Price Increase By Fuel Type – iSeeCars Study|
|Fuel Type||Average Used Car Price (February 2022)||$ Price Change from February 2021||% Price Change from February 2021|
|Average for All Fuel Types||$35,029||$9,080||35.0%|
Hybrid and electric vehicles had used car price increases well above the average for all fuel types. “The increase in gas prices has led to a surge in demand for hybrid and electric vehicles,” said Brauer.
For the used cars with the smallest price changes, check out the full used car prices study.
Why Are Used Cars So Expensive? Chip Shortage Explained
The prices of used cars are at record highs because demand is exceeding supply. Microchip suppliers paused production in the beginning of the COVID-19 pandemic to protect workers, and the economic slowdown caused automakers to order less computer chips. When the economy began to recover, there was an increased demand for personal electronic devices, which led to microchip factories becoming overwhelmed. Automakers were forced to stop new vehicle production due to a supply chain shortage of microchips and semiconductors. As a result of the production disruptions, more car buyers bought used cars due to a scarcity of new cars. There was also increased demand for used cars as consumers moved away from cities and required personal vehicles as people abandoned public transportation during the pandemic. This heightened demand was coupled with reduced supply at dealerships as less people were trading in their old cars, which led to a shortage of used cars. The resulting shortage has caused record high prices for used cars.
And it’s not just used cars that are experiencing price hikes. New car prices have risen too with the average brand new car costing above sticker price. Car companies have also slashed incentives due to the shortage of new cars, which has elevated the average price paid for new cars and caused buyers to pay over MSRP. Moreover, the Russia/Ukraine conflict is expected to further elevate new vehicle prices as Russia is a key supplier of nickel, palladium, and aluminum, all of which are required for vehicle production.
“While consumers were previously advised to wait to purchase a used car if they were able to do so, new geopolitical factors are expected to exacerbate and prolong the current used car price increases,” said Brauer. “The best way for American consumers to avoid significantly higher prices for the foreseeable future is to either maintain their current vehicle or purchase a used vehicle that isn’t in high demand, and to be as flexible as possible with factors such as color and trim.”
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iSeeCars.com analyzed over 1.8 million 1-5-year-old used car sales in February 2021 and 2022. The average listing prices of each car model were compared between the two time periods, and the differences were expressed as both a percentage difference from the 2021 price as well as a dollar difference. Heavy-duty vehicles, low-volume vehicles, vehicles discontinued as of the 2022 model year, and vehicles with fewer than 4 of the 5 model years for each period were excluded from further analysis.
iSeeCars.com is a car search engine that helps shoppers find the best car deals by providing key insights and valuable resources, like the iSeeCars free VIN check reports and Best Cars rankings. iSeeCars.com has saved users over $328 million so far by applying big data analytics powered by over 25 billion (and growing) data points and using proprietary algorithms to objectively analyze, score and rank millions of new cars and used cars.
This article, Used Car Prices Still On the Rise, originally appeared on iSeeCars.com.