Feb 25, 2021 - Economy

Used car prices soar

Car made of money

Illustration: Aïda Amer/Axios

Don't be surprised if used cars are harder to find and more expensive for years to come, auto industry experts are warning.

By the numbers: The average price of a used vehicle surged nearly 14% between January and December of 2020 — roughly 10 times the rate of inflation — to over $23,000, AP reports.

The big picture: COVID-19 created a massive ripple effect, as Axios transportation correspondent Joann Muller reported last year.

  • Major auto manufacturers stopped production. That led to a shortage of vehicles on dealer lots, especially trucks and SUVs.
  • Fewer people traded in vehicles or returned leases during the pandemic's early lockdowns.
  • Rental companies bought fewer cars because of travel shutdowns, reducing the number they will sell used, AP notes.

Between the lines: The $30K sedan is a thing of the past, Joann tells me.

  • Many manufacturers even stopped producing sedans in the U.S. or abandoned their lower-priced models in favor of trucks and SUVs.

The bottom line: Low interest rates plus stimulus checks plus supply crunches all point in the same direction.

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