- In September, wholesale used-car prices surged and vehicles sold faster than they did in August.
- A shortage of new cars is driving secondhand prices up.
- The worldwide supply of cars may not recover until 2023, industry analysts say.
Looking to buy a secondhand set of wheels for a reasonable price? You may want to wait a couple of years.
Used-car values have surged during the pandemic as a chip shortage reduced the flow of new vehicles off of production lines to a trickle. It looked like prices were starting to come down after hitting a peak this spring, but now that relief appears short-lived.
According to Manheim Auctions, the largest wholesaler of used vehicles, wholesale used-vehicle prices hit a record high in September of 27.1% above the prices from the same month last year. Retail prices tend to lag slightly behind wholesale, so consumers will likely feel the price hikes soon, too.
Even amid the inflated prices, demand for vehicles is high. The sales-conversion rate jumped to 65% in September, according to Cox Automotive, indicating that buyers are getting more aggressive. It was 52% in September 2019.
Used cars are selling extraordinarily quickly, and buyers will have to act fast if they want to get their hands on a particularly popular model, according to a new study from iSeeCars published Tuesday.
In September, the average used vehicle sold 32.8 days after being listed for sale online, according to iSeeCars. That’s compared with 34.6 days on average in August. In the months preceding March 2020, the average was 68.9 days.
Some of the fastest-selling used vehicles were the Tesla Model 3 (on the market 16 days on average), the Mitsubishi Outlander (19.7 days), and the Toyota Prius (20.7 days).
In light of the worsening chip crisis, forecaster IHS Markit projected in September that global vehicle production will be severely diminished through the rest of 2021 and throughout 2022. Production will also take a hit in early 2023, the firm forecasts.
That means the shortage of new vehicles that’s driving up prices will be with us for quite a while.
IHS Markit forecasted in October that the global supply of cars will start to stabilize in the second half of 2022 and begin to recover in the first half of 2023, Automotive News reported.