As car prices continue to increase, the fallout is growing with new car prices pushing more buyers into the used vehicle market. Unfortunately, this is also causing used car prices to rise, and buyers who think going for a much older used car on the lot will spare them the pain they’re going to be in for a shock.
A recent report confirmed prices for 10 year old and over used cars are rising alongside new vehicles.
It’s no secret that car prices have been going up the past few years. The problem first emerged during the midst of the COVID-19 pandemic with low vehicle inventory and paused production at factories causing auto dealers to increase the prices of new vehicles. This price surge caused more consumers to enter the used car market. As a result, prices for those models began going up sometimes in lockstep with new models.
One avenue that always existed for some customers were really old used cars. These are vehicles 10 years old and over that were often obtained by the dealership through trade-ins and are either older or not desirable models with these vehicles typically being glued to used car lots as a result. Sometimes, these older vehicles were bought by low-income buyers who needed a vehicle but didn’t have the credit or the cash needed for either a new or like new used vehicle. However, it appears that this era is coming to an end with price spikes beginning to appear in these vehicles too.
Price increases leave nowhere to hide
Surging new car prices are fueling an exodus into the used car market which is now seeing prices go up as a result.
According to a recent iSeeCars study, the average price of a 10 year old used car is now $12,194. That’s a 60% increase over what consumers paid in 2014 when the average price of a used car of the same age was $7,583. The increase is fueled by a growth in market share for used vehicles with more consumers entering the market and that includes a higher percentage of lower income buyers looking for a budget ride. This figure is the latest in a recent string of price increases with prices slowly going up until reaching the $12,000 barrier.
“The trend in vehicle prices represents an inescapable tidal wave,” said Karl Brauer, executive analyst at iSeeCars. “When you have new and lightly used car prices spiking, as they have over the past four years, there’s no stopping the wave’s impact on older cars, even for cars produced more than a decade ago.”
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SUVs and pickups are not part of the problem
In the used car market, sedans, wagons, and hatchbacks command a large slice of used vehicle sales.
Unlike the new car market where SUVs and pickups are the proverbial golden gooses for sales departments, in the used car market, the reverse is true, with the bulk of 10 year old and over vehicles sold being sedans, hatchbacks, and wagons. These vehicles are often cast aside by consumers looking to replace them with a new CUV or pickup and in the used car market, this undesirability when combined with their higher fuel economy and their lower insurance rates allow these vehicles to command a sizable share of the used vehicle market despite the price creep that’s rapidly gaining steam in the broader market.
“While not as popular with new car buyers, older sedans, wagons, and hatchbacks are gaining market share in the used car market,” said Brauer. “Their lower cost, lighter use, and higher fuel efficiency make them an excellent alternative to larger trucks and SUVs that cost more up front and more to fuel and insure.”
Look for this trend to continue in the near future with prices in the used car market as a whole continuing to increase as a steady stream of customers continue to enter the used car market due to being priced out of new vehicles with many of these vehicles now starting at just under $50,000.
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