Are you thinking about selling your car? Do it now!
But if you are looking to buy a used vehicle, good luck!
Here’s what’s going on ...
Used car prices explode
Used car prices are up 20.8% in the Detroit market over the past year. Nationally, used car prices have increased 16.8%, or $3,926, over the past 12 months, compared to most years when they remain constant.
In Metro Detroit, the data show the average used car price is up a staggering $4,482 compared to a year ago. That puts the Detroit market just out of the top 10 markets based on year-over-year price change:
The data is from iSeeCars. Their researchers analyzed more than 800,000 used car sales from model years 2016 to 2020 in April 2021, and more 400,000 used car sales from model years 2015 to 2019 in April 2020. 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 2020 price as well as a dollar difference. Note: Heavy-duty vehicles, low-volume vehicles, vehicles discontinued as of the 2021 model year, and vehicles with fewer than 4 of the 5 model years for each period were excluded from further analysis.
Used cars with greatest price increases
- Pickup trucks and sports cars had the highest price increases, which makes them the worst vehicles to buy and the best vehicles to sell.
- The best used vehicles to buy right now only saw minor price bumps including some small SUVs, hatchbacks, and minivans.
The vehicle that has the greatest price increase is the Chevrolet Corvette, which has risen in price by 33.9 percent since April 2020:
Do you happen to have an extra pickup truck lying around? Probably not, as pickup owners often USE and NEED their vehicles for their livelihoods. But if you do have one and you can part ways with it, put it up for sale yesterday! These price increases are eye-popping for the pickups.
What about an old sports car? It might be time to take the tarp off, roll it out of the garage and slap a for sale sign on it. I just saw a neighbor do this the other day with his 1996 Ford Mustang GT Convertible. That car was sold within hours for what I assume was way more than he could have imagined just a year ago. He has tried to sell it several times the past 5-10 years.
“These sports cars are aspirational cars for many consumers, and they surged in popularity during the pandemic as drivers sought fun cars to combat boredom,” said Karl Brauer, iSeeCars executive analyst. “Sports cars aren’t practical purchases, so drivers are likely more willing to pay a premium for them, especially because they aren’t as common in the used car marketplace.”
Meanwhile, Tesla’s Model S is the only used vehicle that has decreased in price:
“The once high-demand Tesla Model S has declined in popularity thanks to more affordable Tesla models like the Model 3 and Model Y, both of which are substantially cheaper than the used Model S, even when purchased new,” said Brauer.
Used car price changes by body type
Every vehicle segment increased in price compared to last year, while pickup trucks increased the most, followed by convertibles and coupes.
Minivans are not as popular as they once were -- I personally don’t understand this as the proud owner of a minivan!
Regardless, here’s what we’re dealing with in a nutshell: I bought my minivan back in 2019, and right now I could sell it for thousands more than I bought it for, easily. I won’t because I need it for the three kids I am carting around to soccer, etc.
However, some Americans DID shed vehicles during the pandemic. Many of them are trying to buy now that they’re returning to work and school, only to be met by the increased prices.
Global chip shortage, pent-up demand
These price increases are directly related to the global semiconductor chip shortage. If the chip shortage is news to you, here’s what’s happening:
A global shortage of computer chips has forced automakers to slash production. Automakers first had to halt production at facilities when the COVID-19 pandemic swept the globe. Then, when it was time to restart production, they had to get in line behind electronics companies who bought up the chips. The automakers have been left playing catchup ever since as there aren’t enough semiconductor chips to go around.
A May 2021 report revealed Ford expects to produce only half its normal number of vehicles through June. GM and others have resorted to halting production of some cars and smaller SUVs and diverting computer chips to higher-profit pickup trucks and large SUVs.
But as TrueCar analyst Nick Woolard told Consumer Reports, the chip problem is compounded by a year’s worth of pent-up demand from people who are starting to venture out again.
“Experts are expecting this to drag on to the fall, and as far as where consumers can go for alternatives, there aren’t a whole lot of options,” he Woolard said. “Anyone who’s waiting for prices to come down might be waiting for a while.”
If you have plans to buy a used vehicle in the next 6 months, it’s best to get to work on making that purchase sooner than later. You’ll also have to be a bit less “picky” than you may have been in the past when shopping for a used car. Watch for the deals.
If you’re selling, and you can wait a bit for the right price, you’re definitely in the driver’s seat. Now’s the time to list it!