BOSTON — After housing, your car may be your biggest expense, and right now it is a lot more expensive than it once was. The average price of a used car is nearly $30,000 — the highest ever.
Numbers obtained from auto industry insider Edmunds show that from April 2020 to Jan. 2020, used car prices moved from a little above $21,000 to $29,500… a nearly 30% increase.
The change is fueled by what industry experts point to as a shortage of microchips, semiconductors that control electronics inside a vehicle. According to Ivan Drury, the senior manager of insights at Edmunds, the semiconductor shortage ultimately created a shortage of new cars.
“We’ve got demand, not just from regular people looking to buy used cars: we have new car buyers that cannot find a new car shifting over to used,” Drury said.
That, in turn, created more demand for used cars and drove those prices higher.
“Those who are having the hardest time are buyers on a really limited budget, folks who want to buy a car for maybe $5,000 or $10,000, cars that are traditionally higher mileage, older vehicles, and they’re being priced out,” said Matt Deegan, an editor at Kelley Blue Book.
Both industry insiders said the same thing when asked about a possible end date for the rise in prices, saying it is difficult to forecast with so many variables at play. The earliest predicted was possibly later this year.
Consumer adviser Clark Howard said if you want a good price, you’re going to have to wait till the end of this year, or early next year, when dealers should have more inventory.
Howard advises that you keep driving the car you have, even if you must make a costly repair because it’s worth it.
He says if you need to buy now, you’re best to target a car that’s 3-years-old if you want to get the best value.
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