The average price of a used car reached a record high of $28,000 last month, surpassing prices in January of last year by 40%, according to used car dealer CARFAX.
The price is approximately the same as what a new car used to be, a byproduct of a lack of car inventory and computer chip shortages, Emilie Voss, director of public relations at CARFAX, said.
“We’ve never seen a number like that for average price for a used car nationally,” Voss told ABC News on Wednesday. “We’re seeing record prices, and part of that is a severe lack of used car inventory. What we hear about with the car chip shortage impacting production, that is trickling down to used cars.”
INFLATION ROSE TO 7.5% IN JANUARY, HIGHEST IN FOUR DECADES
New car prices are high as well, with the average price of a new car around $45,000 in December of last year, according to a report by analytic and consumer intelligence company J.D. Power. The previous record had been $41,044 in July.
The increase in prices is expected to slow in the second half of the year, however, as the production of new cars returns to normal.
“There are headwinds right now — new car supply is projected to get better in the second half of the year, and consumer demand has slowed recently due to the recent COVID spike and high used car prices,” Voss said.
J.D. Power predicts that used car prices should fall as much as 9% in the fourth quarter of 2022 compared to the fourth quarter of 2021, according to CNN. Although the prices are expected to drop, they will not likely return to pre-pandemic prices, according to David Paris, senior manager of market insights at J.D. Power.
Despite the high prices, a dedicated sect of consumers is contributing to vehicles moving off the lots faster, with a used car moving off the lot within a week, a time frame that took 30-60 days before the pandemic, Cars.com experts said.
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The prices for food, housing, gas, and small businesses have also seen a heavy increase as a result of the pandemic and inflation. Inflation reached 7.5% in January, the highest increase in 40 years. The National Federation for Independent Business reported that 61% of small businesses raised their prices in January, according to ABC7 Chicago.
Representatives for Carfax, Cars.com, and J.D. Power did not respond to the Washington Examiner’s requests for comment.
