[RahulNagaraj]

Car prices in the US market have been reaching record levels over the past year, amidst the lockdown and the global chip shortage. According to a media report, used car prices in the USA have, on average, climbed by 30% in the past year alone.



This has created a condition wherein, high demand models in the used car market are selling at prices higher than their MSRP when new.

According to a media report, the increase in prices of used vehicles accounted for one-third of the rise in inflation last month. Inflation is said to have shot up by 5% - the highest 12-month increase seen since 2008.



The report also suggests that the trend started during the months of April and May last year when the Covid-19 pandemic broke out. The pandemic forced vehicle manufacturers to shut down production for long periods even as demand continued to remain strong.

While the production got underway to meet the demand post the lockdown, the semiconductor chip shortage again forced a few manufacturers to cut down production and / or temporarily close factories. These factors are said to have pushed car buyers to the second-hand market.



Some of the most popular models in the used car market are high-priced SUVs and trucks. These include models such as the Ford F-150 Raptor, 2019 Jeep Wrangler Unlimited Rubicon and the Mercedes-AMG G63 SUV.

Even mainstream models such as the Toyota Tacoma, Kia Telluride and the Hyundai Palisade have been selling at higher values than their original prices.



Having said that, reports suggest that the price increases might be slowing down. Although the used car market might have reset its normal price point, it will take a longer time for the prices to get back to pre-COVID levels.

Source: AP News

Link to Team-BHP news

[pavanmadhini]

There is an interesting podcast around the same topic which dives in a bit deeper into the current used car market in US.

https://podcasts.google.com/feed/aHR...MGZmZGQ1?ep=14

[vinbie2019]

I recently sold my 2014 Corolla LE and 2014 CRV EX-L, which was purchased preowned in 2017, from different different dealerships then, dealers usually sell high and buy at lower price compared to individual buyers.

Demand is so high right now, i quoted my purchase price and dealer honored the price with no second thoughts.
So i owned my preowned vehicles for 4.5 years for almost 0% depreciation. .

[TDCi'd]

Oh, god. I just moved the MA and I'm going to need a car soon, this chip shortage is making me go crazy. All the options that i had shortlisted are now like super high with no real logic..

[PrideRed]

Used car market is booming across the globe. Popular models are making a killing.
In India too prices have shot up. Some recent experience:
1. Ignis Delta 2017 AMT: asking price 7.5L no bargain.
2. Creta SX(O) diesel 2018: 14.5L, slightly negotiable

[akshay4587]

I bought my 2010 CRV in 2018 and have driven it for 70K kms now.
I can still sell it for the price i got it for, or slightly more in Melbourne
A friend was looking for a used car, and he ended up getting a new one for the same price, albeit a different model in the same segment.

Crazy times!!!!

[GTO]

This is simple economics at work = the current demand for cars is far greater than supply, hence prices all across the board are shooting up. In India too, used car prices are firm or climbing. A friend of mine who asked for a discount when buying a new car was almost laughed out of the showroom .

Dealers & manufacturers better not get addicted to it, or overconfident. We're past the peak IMHO & Bloomberg agrees:

The record-breaking rise in used-car prices is probably coming to an end -- and with it a key driver of the recent spike in U.S. inflation.

The bellwether of the industry -- the wholesale market where dealers buy and sell in bulk -- has already topped out and prices of individual secondhand cars should follow in a matter of weeks, said Zo Rahim, industry analyst at Cox Automotive. Cox owns Manheim, the biggest U.S. auction house selling millions of vehicles every year.

[CarNerd]

So cars are becoming appreciating assets? I think we should make a list of cars which might see a big demand after 10 years. Time to invest in cars along with properties

[Anirudhneni]

I agree that the chip shortage has caused demand to go up higher than supply. The fact that all materials and components are more expensive post pandemic for companies to source, this has caused car prices to increase? Is this a case of inflation driving up prices of everything in the economy?

[NH08]

My office, working with 50% strength only on a day, is facing parking issues which was not there in pre-covid era with 100% staff.

Reason - everybody who has a car, is using the car. Earlier, many of them used to commute by Metro. Some who did not have car, bought new/used ones just to be safe in these times.

[sid_deb]

Originally Posted by CarNerd

So cars are becoming appreciating assets? I think we should make a list of cars which might see a big demand after 10 years. Time to invest in cars along with properties

Cars such as the Innova Crysta might be more attractive to invest than properties which are witnessing negative returns or even loss of capital (with builders running away or going bankrupt)

[Pacific]

A friend of mine has a CRV and its lease is coming to an end in October of this year. As per the contract, if my friend plans to buy the CRV after the lease period he has to pay 18K USD. Last month, his dealer reached out to him and mentioned that if he (my friend) returns the car, the dealership is ready to offer 25K and will write-off rest of the remaining lease payments.
He is in bit of a catch-22 situation because if he gives away the CRV then he might have to shell out a premium for the next car. For instance, both CRV Hybrid Touring and Hyundai Tucson Limited Hybrid are carrying a premium of 2K over and above their selling price. Dealers are asking for 10K premium for a RAV-4 Prime over the selling price.

[knshailender]

I live in the US and yes, used car prices have skyrocketed in the last 6 months or so. I was able to sell my car that I bought last year at double the price this year. It's a 2006 Hyundai Sonata. So in my case it appreciated 100%.
I've bought another used car at a reasonable price and I plan on keeping it for sometime because it's become more difficult to find good used cars of late.

[tsk1979]

My GX 470 got totalled. Due to prevailing prices in the area, I got the same value from insurance as I had spent on the vehicle.

This is after driving the vehicle 70,000 miles (150,000 purchase, and 220,000 on salvage)

[vineethvazhayil]

I sold two cars in one month, consolidated down to 1 car, took 11k in cash out and invested it! Both cars sold for nearly the price I paid for them when new (2 and 3 years old cars) - I did not originally pay MSRP on either. Totally made use of the macroeconomics at work here. Will consider another car when we need one. I now have EV infrastructure at home that I don’t use, hopefully next car if and when needed is an EV or PHEV.