The wholesale prices car dealers pay for the used cars they later sell rose to a record high in September. That almost certainly means further price increases on used cars in the coming weeks.
Dealers Paying More Means You’ll Pay More
The Manheim Used Vehicle Value Index tracks the prices car dealers pay at auction for used cars. It rose more than 5% in September alone. Used car wholesale prices now sit 27.1% higher than one year ago.
The average used car was listed for nearly $26,000 at the end of August. An increase in wholesale prices means that figure is likely to rise when September’s numbers are final.
A worldwide shortage of microchips has pushed new car prices to record highs. Automakers have slowed or stopped the production of many cars because they cannot find enough chips to make them. But buyers have continued to snap them off of sales lots. That causes prices to rise.
High new-car prices push some shoppers to look at used cars instead. That sends used car prices soaring.
Cox Automotive Chief Economist Jonathan Smoke explains, “The new-vehicle production problem worsened instead of getting better in Q3. Used inventory issues were further exacerbated by damage to vehicles caused by Hurricane Ida in late August, putting pressure on an already historically tight market.”
Cox Automotive is the parent company of Kelley Blue Book.
Some Shoppers May Be Waiting Out High Prices
High prices are keeping shoppers out of both markets. Total new car sales were down 25% in September compared to one year ago. Kelley Blue Book research shows that some buyers are now attempting to wait out high new car prices.
The same phenomenon may be starting in the used car market. Total used vehicle sales declined by 13% year-over-year in September.
Dealers paid more for every type of used car in September. Sport utility vehicles and vans saw the highest price increase.
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October 11, 2021 at 10:01PM
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Wholesale Used Car Prices Set Record; Retail Price Increase Likely - Kelley Blue Book
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