COSTA MESA, Calif.–The average price paid for a preowned vehicle hit a record of $25,463 in April, about $2,800 higher than in the same month last year, according to new data from J.D. Power. The price threshold marks the first time ever that the average used-car price had exceeded $25,000, the firm added.
The climb, which began last year, has surprised some dealers who say they don’t see the trend ending soon, the Wall Street Journal reported.
“What is normally a depreciable asset has been appreciating,” Phil Maguire, who owns Maguire Family Dealerships, a group of 13 stores in New York state, told the Journal. “It’s certainly surreal, and I guess we can all agree that it’s an anomaly.” Dealers say they are having to pay more to keep their lots stocked.
The report noted surge is being driven in part by the global chip shortage, which is straining inventories on the new car side and leading more consumers to shop the preowned market.
“At the same time, used-car supplies were tight heading into the year because people were hanging on to their leased vehicles longer, according to analysts, executives and dealers,” the Journal added. “Rental-car companies also had pared back their fleets early in the pandemic, leaving them with fewer vehicles to sell later in the year.”
Moreover, the higher used-car prices are further challenging affordability for Americans in need of new rides and come as demand for vehicles overall continues to rebound after auto sales collapsed last spring, the report added.
New Car Prices Also Hit Record
U.S. sales of used-vehicles hit 3.4 million in April, up 58% from a year earlier, according to car-shopping website TrueCar.
Meanwhile, retailers started April with about 18% fewer preowned cars and trucks on their lots than they did in the prior-year month, according to vAuto, a firm that provides new and used-car data to dealers, the Journal said.
The average price paid for a new model climbed to a near record of $37,572 per vehicle in April, up about 7% from a year earlier, according to J.D. Power.