- The average price for a used car hit $27,000 in November and is now already up to $27,500, according to Black Book.
- You can probably guess the reasons for the increase: a limited supply of new cars means more attention is focused on used cars, and higher prices come with higher demand.
- The average used car costs around 35 percent more today than it did at the beginning of 2021.
We have all heard about prices rising for groceries and new cars, but don't think used cars have been left out of the race. Whether it’s a 27 percent rise in the Philadelphia area, almost 28 percent in Utah or a 25 percent increase in Chattanooga, the numbers are going up.
Analysis of retail listings and sold data done by Black Book, a Hearst company, found that the average sold price for a used car crossed $27,000 in early November and currently sits at just over $27,500. Black Book’s data covers both franchise and independent dealers and contains more than 95 percent of all available used vehicles for sale.
Prices are climbing, in part, because supply is lower than it could be. One reason there are fewer used cars available to buy is because dealers often get these used vehicles to sell by taking them in as trade for a new vehicle.
With new cars also in short supply (you know, the chip shortage, supply-chain disruptions, and COVID-19), people aren't trading in as much these days. Black Book says that the number of used retail listings here at the end of 2021 sits at around 16 percent lower than the level where it was at the beginning of the year. “New inventory is slowly making its way to market, but not at the levels needed to boost used retail listings to the ‘normal’ level,” Black Book said in a recent report on automotive wholesale prices.
Different analyst companies use different methods to count vehicles, but the trend is similar over at Kelley Blue Book. KBB’s numbers show that the current used-car inventory situation sits at 15 percent lower than it was a year ago, but the good news is that inventory is slowly starting to increase.
Used car dealers in the U.S. had 2.31 million vehicles in stock at the end of November, up from 2.25 million at the end of October. Black Book found that when there are used vehicles available, they're often newer models. The inventory of used vehicles that are up to two years old is growing faster than vehicles that are between two and eight years old.
Black Book also analyzed the prices of approximately 2 million vehicles listed for sale on U.S. dealer lots, specifically used vehicles that are between two and six years old. Black Book found that the price index for them has been mostly steadily climbing since the spring, with a bit of a plateau in the late summer. Since then, things have only gone in one direction.
“In Q4 [of 2021], prices on retail listings have steadily increased week after week and the retail listing price index now sits at around 35 percent above where we started the year,” Black Book notes. “The scarcity of both new and used inventory in the market fuels these consistent increases.”