Why are Used Cars Costing More than New Cars?

 Why are used cars costing more than new cars?

Connor Detthloff

Since the beginning of the pandemic, we have seen car dealership parking lots basically empty. The root of this problem stems from the chip shortage, which doesn’t allow cars to be sent to the consumer but rather sit in a parking lot waiting for one part. A very low supply of new cars, increasing inflation, and increased labor costs, it has driven the price of new cars up. The average price for a new car right now is over $47,000 which is up over $10,000 in the past 2 years. The chip shortage has caused automakers to limit the number of cars they produce. In efforts to make the most money off of a new car that they can, they have started making a limited number of base model cars. Instead, they are making high-end models to charge the most money. 

With only small amounts of new cars available, the prices of used cars have skyrocketed. New cars can take months to be delivered when a used car is available right now. This convenience has helped the price increase. In some cases, a consumer could buy a new car cheaper than a used car of the same model and year. According to barron.com, a new Tesla Model 3 performance starts at about $63,000 with delivery in about 5 months. But on Kelly Blue Book a used performance Model 3 will cost about $65,000. 

But in the past few months, it has been looking up the price of used cars. The Manheim US Used Vehicle Index which tracks used car prices has started to shift downwards. However, it is still up about 60% from before the pandemic. Many experts don’t expect the prices of cars to decrease anytime in the near future. Ford believes the shortage will come to an end in 2023, but no one is sure. It is not a good time to buy a new or used car but a great time to sell any. 

Works Cited

Blanco, Sebastian. “New Car Price Keeps Climbing, with Average Now at Almost $47,100.” Car and Driver, Car and Driver, 12 Jan. 2022, https://www.caranddriver.com/news/a38748092/new-car-average-sale-prices-47100/.

Business, Fox. “Here's Why Used Cars Are Getting so Expensive.” New York Post, New York Post, 16 Feb. 2022, https://nypost.com/2022/02/16/heres-why-used-cars-are-getting-so-expensive/.

Evans, Claire. “Chip Shortage Delays: How Long Will You Have to Wait for a New Car?” What Car?, What Car?, 2 Sept. 2021, https://www.whatcar.com/news/chip-shortage-delays-how-long-will-you-have-to-wait-for-a-new-car/n23449.

Root, Al. “Some Used Cars Now Cost More than New Ones. Here's Why.” Why Some Used Cars Cost More Than New Ones | Barron's, Barrons, 7 Apr. 2022, https://www.barrons.com/articles/used-car-prices-new-51649349184.