Millions of American motorists have been priced out of the new car market. But even if they settle for something previously owned they could find it straining their budget, affordability just as much of a problem in the used vehicle market these days. More from Headlight.News.
A record number of buyers are struggling to find affordable used vehicles.Looking to replace the aging vehicle in your driveway, chances are you’re questioning whether to buy something used. With the average new model going for more than $50,000, according to industry data, millions of motorists are simply being priced out. The problem is that you could be in for a shock when you take a look at what’s available these days in the previously owned segment of the market.
The typical used vehicle now goes for about $30,000, according to Edmunds. That’s a full 50% higher than in 2019, when the typical previously owned model went for about $20,000. In comparison, the overall Consumer Price Index rose 31% since then.
“Is anyone else struggling in this market?” This seems “totally insane,” said user Subject-Eye on Reddit, his post triggering a flurry of similar complaints and lamentations.
What’s new
In the U.S., sales of used models have traditionally run more than twice demand for new vehicles, though the gap has been widening, according to industry experts, as affordability becomes more and more of an issue.
If you think you’re getting less for your money when it comes to used vehicles, well, that’s likely the case. At an average of around $33,000, a three-year-old model costs nearly as much as a new vehicle did barely a decade ago.
If you’re looking for a bargain, say, something in the $10,000 to $15,000 range, you’ll likely have to settle for a 9-year-old vehicle with an average 98,000 miles on the odometer, Edmunds data reveals. In 2019, that same budget would get you a 5-year-old vehicle that had clocked only 58,000 miles.
Driving up prices
Shortages of key parts and components, including semiconductors, led to a sharp slowdown in production during the pandemic.
A variety of factors have come into play to drive up used vehicle prices. The standard rule-of-thumb is that new models will lose about 40% of their value over their first three years in use. But inflation means they’ll enter the used market at a much higher value than in the past.
It doesn’t help that demand for used vehicles has grown over the past decade due to strained household budgets.
Another factor that came into play was COVID-19 and the subsequent impact it had on the automotive supply chain. The pandemic led to serious disruptions in the supply of parts such as semiconductors, forcing manufacturers to sharply curtail production of many models between late 2020 and the latter part of 2024. That meant millions fewer vehicles eventually entered the used vehicle market, several analysts told Headlight.News.
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Less leasing
Another factor has been the slowdown in leasing, noted the Bloomberg. Prior to the pandemic automakers were leasing around 4 million vehicles annually. This year the figure is expected to come in closer to 2.5 million, the news service reported.
Because of the way leases are written, those vehicles typically return to dealers two to three years after they were driven off the lot. The slowdown means fewer high-value “nearly new” models are available, creating a seller’s market.
In turn, that forces less affluent buyers to settle for older, higher-mileage products. But they’re also in shorter supply than in the past – and will be for quite some time because of the pandemic production cuts.
For those looking for the most basic transportation, whatever they find will cost more. “It’s a thinner market than it was in the past,” Amy Hyken, a 58-year-old child family therapist from Kansas told Bloomberg. “I’m paying more, and finding the car I want is harder.”
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