What Is The Average Used Car Price In America?
Hanna Kielar4-minute read
January 19, 2022
If you're in the market for a new or used car, sticker shock is likely no stranger. The pandemic has created both high demand and supply chain issues, which have driven up car prices. The average used car price is up year over year, making it more difficult for people to find an affordable vehicle option.
Buying a car online is one way you can expand your market and find better deals on vehicles. But before you start shopping, read on to find out more about the current trends in used car prices.
How Much Is A Used Car?
As of October 2021, average used car prices were more than $25,000 in the United States. That average held steady from the summer and is up as much as $5,000 over 2020 averages.
That average does differ by location. As of late 2021, states like Alaska, Wyoming, Montana and Arkansas have the highest average used car prices, coming in with numbers ranging from around $27,000 to almost $30,000.
Currently, Kentucky, Virginia, Connecticut, Ohio and Indiana have the lowest average used car prices, with averages all falling under $23,000.
Buying a car out of state could be a way to find the make and model you want at a lower price point. That's especially true if you're in a state neighboring another with low used car prices. West Virginia's average is more than $25,000, for example, so a few hours' drive to the south or east into Virginia could make a difference.
Why Are Used Cars So Expensive Right Now?
According to Kelley Blue Book, even wrecked used cars have higher resale prices these days. In fact, in a year-over-year comparison, salvaged vehicles were selling for 20% more in the third quarter of 2021. The vehicle value index showed a historic high for wholesale used car prices in October 2021.
The reason for the surge in price is simple economics: Supply can't keep up with demand. More buyers than usual coupled with fewer cars available drives prices up. That's true for both used and new cars, and new car supply issues affect used car inventories. As people buy out the new inventory available online or in dealership lots, those in need of cars or trucks turn to used vehicles. That increases the demand for used vehicles without an equal increase in supplies.
When demand is high and supply low, it typically leads to a price increase. It's how the market works to balance and adjust itself.
Unfortunately, the supply chain issues are deep; they go all the way down to the microchips used to run computers in cars. The global microchip shortage caused by the COVID-19 pandemic continues to create obstacles for automobile manufacturing. As long as there's a shortage of new cars, used car inventories and prices will remain impacted.
Used Car Market Trends
The average sticker price of a used car depends on the type of vehicle you're purchasing. Used truck prices average more than $34,000, and heavy-duty models often run more. Sedans, wagons and hatchbacks have the lowest average price range, from around $14,400 to almost $18,500. SUVs, which have the highest vehicle share within the used market, have an average sale price of around $25,000.
How long it takes for a used car to sell is a good indicator of trends in supply. According to an ISeeCars study, the average used vehicle has required more time to sell since October, 2021. In November, the average used vehicle took almost 52 days to sell, up from the 45-day average in October. That could be good news for stabilizing inventories because it suggests there are more cars per buyer available.
When Will Used Car Prices Drop?
It's hard to predict when used car prices will drop because of the unprecedented factors affecting today’s economy and car industry. Any significant price drop will require normalizing vast and complicated layers of differing supply chains.
In June 2021, the White House published data that suggested supply chain issues would abate within six months. In September, it recognized the ongoing chip shortage and provided updates on what it was doing to mitigate the situation and protect the country against such an outcome in the future. Automotive market analysts can only speculate on when car prices might drop. It's likely safe to assume the supply chain issue affecting new and used car inventories will extend well into 2022.
If you can't wait three or six or more months to buy a car, however, you may need to prioritize making a budget and master how to get the best deal on a used car.
The Bottom Line
Vehicles are big purchases no matter when you buy them. In a market with limited inventory, it can be more difficult to find the car you want at a price you can afford. If you currently do not own a car and can get by a little longer without one, it might be best to wait a few months to see if prices start coming down. If you do own a car that you plan to sell or trade in, consider that the trade-in value is also higher than usual, which will offset the inflated price of whatever car you buy next. In the meantime, make steps to improve your credit, prepare your personal finances, narrow your focus on the type of vehicle you seek (SUV, compact, pickup, etc.) and keep an eye on used car inventory so you can act quickly when an excellent deal presents itself.
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