Typically a car depreciates in value the second it’s driven out of a dealership lot. But for the past couple of months, used cars prices have gone up to the point where consumers are discovering they could make a profit off selling theirs.
In April consumers paid 7.3% more for used cars than in March. But by May, consumers paid a whopping 10.5% more for used cars than in April, according to Consumer Price Index data.
Luckily for buyers, prices barely went up last month, rising just 0.2%, according to the latest CPI report. But compared to last July, Americans are paying nearly 42% more for used cars.
‘We are not seeing a drop in pricing’
Not much, said Kelsey Mays, assistant managing editor and consumer advocate at Cars.com.
“We are not seeing a drop in pricing,” he said. “We do see some abatement, month over month, in what used to be a meteoric rise of used-car prices.”
On Cars.com the median used car price in July was $23,677, up just 2.2% versus June 2021’s $23,166
The global microchip shortage and heightened demand for used cars have kept prices elevated, but they’re not going up as fast as they once were.
On Cars.com the median used car price in July was $23,677, up just 2.2% versus June 2021’s $23,166. “That’s a much lower increase than the 9.1% jump between June and May 2021,” Mays told MarketWatch. “However, we caution that used cars remain expensive.”
People won’t continue to pay the same amount for used cars as they do for new cars “indefinitely,” said David Mericle, chief U.S. economist at Goldman Sachs.
“Once new car production comes back, those prices are going to fall,” he said, referring to used cars. For the first time in five months, new car prices rose by a higher percentage (1.5% compared to 0.25) than used cars in July.