Inflation is alive and well on the used car lot. After more than a year of increasing prices for used cars and trucks, a new report shows that prices for these vehicles surged by another 16.9% year-over-year in May.
According to iSeeCars.com’s latest analysis of nearly 2 million used car sales in May, the microchip shortage continues to impact the automotive industry because it has created a shortage of new cars. That spillover demand continues to stoke the price of used vehicles.
Karl Brauer, executive analyst at iSeeCars.com, says 2022’s surge in gasoline prices has added to price pressures on certain types of used cars, particularly those that use less gas.
“We are also seeing a significant increase in demand for used hybrid and electric vehicles as a result of high gas prices, with the cost of electrics increasing by 37.7% and hybrid cars increasing by 32.1% compared to last year,” Brauer said.
The biggest price spikes
For example, the price of a Hyundai Sonata Hybrid is $8,530 more than it was a year ago, a 12-month increase of 47.8%. The electric Nissan Leaf costs $7,829 more than last year, a 41.4% price increase. A used Tesla Model S increased in value by more than $22,000 in the last year, pushing its price tag up to $80,000.
Even with record-high gas prices, consumers might have a hard time justifying those kinds of price increases to just save a few bucks at the gas pump. The iSeeCars analysis found that some less fuel-efficient vehicles haven’t gone up in price as much, perhaps making them smarter buys for consumers who are in the market for a used car.
“While these used models are still more expensive than last year, they haven’t been as drastically impacted by price hikes,” said Brauer.
Vehicles with smaller price hikes
A used Chevrolet Camaro only costs $101 more than it did in May 2021, a 0.3% increase. The popular Ford F-150 pickup might use a lot of gas, but the analysis shows that it only sold for an average of $1,221 more than it did a year ago.
The full-size Nissan Armada has also posted a very modest price increase over the last 12 months. In May, it sold for $1,256 more than in May 2021.
“The Nissan Armada is one of the slowest-selling vehicles in the segment, and the demand for this gas-guzzling vehicle has likely dropped further amid high gas prices,” said Brauer.
New cars sell for above sticker price
It’s not just used cars that are experiencing price hikes. New car prices have risen too, with the average brand new car continuing to sell above the sticker price. New car buyers are also seeing far fewer incentives like cash back and low-interest financing.
Brauer said the car shortage isn’t likely to end soon, and prices will remain elevated. He advises consumers to hold onto their present vehicles if possible. Otherwise, he suggests choosing a used vehicle that is not so much in demand.