But they’re still incredibly high…
Many in the media are doing a victory lap at the moment because during the month of July, used car prices in the United States increased only 0.2%. With Quartz proclaiming the “used-car bubble has burst” and Business Insider celebrating “the biggest reason to worry about runaway inflation” having “evaporated” you’d think everything is great. The problem is it isn’t. Sure, used car prices surged 10.5% in June, so an increase of only 0.2% is better, but that doesn’t mean you’re going to find amazing deals on used cars anytime soon.
High used car prices mean thieves want your ride more than ever. Read more about it here.
As MarketWatch correctly observes, usually the value of a used vehicle depreciates, so the fact prices rose at all is concerning. But the real kicker is in the detail missing from so many reports on used car prices: we’re still paying way more than a year ago for the same vehicles. That’s right, in July it’s calculated on average used vehicle prices were almost 42% higher than they were in July of 2020.
There’s really no use celebrating until used car prices drop, and by a lot. But that might not happen for some time, meaning you, your family members, your friends, and everyone else will continue to get gouged when it comes time to trade that old hunk of junk you’ve been nursing along for a newer ride.
You’re probably wondering what will cause used vehicle prices to finally drop like a rock. David Mercicle, chief U.S. economist at Goldman Sachs told MarketWatch the key is new car production ramping back up to where it was before.
Standing in the way of automotive factories churning out vehicles like hot cakes is in part the microprocessor chip shortage you’ve probably heard about. Different reports peg different timelines for when full relief will come, but it seems we have at least several months before that’s even possible. In the meantime, we’re seeing new car prices continue to creep up, with an increase of 1.5% in July.
For now, we all have to do what we can to make things work before there’s a market correction. You might still be able to hunt down a deal here and there, but it will take persistence.