Used car prices are easing slightly as new car inventory inches upward and buyers hit their price ceiling.
The upward trajectory of used car prices, fueled by the shortage of new cars, appears to have leveled off, with average prices nationally in April $21 cheaper than prices in December, according to data from Edmunds.
Attorney and spokesman for the Illinois Automobile Dealers Association Larry Doll said the price softening is being seen in Illinois as well.
“It’s going to take a while, obviously, because the new vehicle shortage runs down to used vehicles, but hopefully we’re off peak,” he told The Center Square.
Inventory of new cars is the biggest factor when it comes to used car prices.
“The average day supply from our sample is about 71 days — got enough cars to sell for 71 days,” Doll said. “A few months ago, that was 30 days on the new side.”
Used car inventories are up from 42 days at the end of last year to 49 days as of May 15, according to Doll.
Sky-high prices have also deterred many buyers, who simply refuse to pay the going rate for a pre-owned car, the Wall Street Journal reported.
Over the past two years, used car prices shot up 45% — a faster increase than new car prices, the article stated. At the end of last year, they reached an average of $29,969, according to Edmunds.
“Affordability is certainly an issue,” Jeff Williams, chief executive of America’s Car-Mart Inc., a chain of used-car retailers in the Midwest and South, told the Wall Street Journal. “What we’re hearing from customers, and potential customers, is that prices are too high.”
In April, the U.S. Labor Department’s consumer-price index showed prices for used cars and trucks fell 0.4%.
Now might be the best time to buy a used car Illinoisans have seen in a while.
Dependent on new car production, however, prices are fragile and could go up again if there is another production disruption, said Doll.
“It probably is a good time to buy, dependent on your needs, because we don’t know when the next production disruption is going to be on the new side that cascades down to the entire supply,” he said.
Doll said this relationship means it will take a while for prices to stabilize, noting COVID-19 variants playing havoc in Asia, where most semiconductor chips are produced.
And American companies looking at producing chips domestically can’t be counted on for another year or two, he added.
“I mean, just getting back to normal production levels, there’s still going to be buyers that have kind of been waiting out the market, so it could be every bit of a year before we’re back to what we used to call normal,” he said.
This article originally appeared on The Center Square.