Used vehicle values have risen considerably from their COVID-19-induced free-fall.
New-car sticker prices are set by manufacturers and remain rather steady over the course of a model year. At the most, minor increases are made here and there to popular vehicles, with automakers slapping cash and financing incentives on the hoods of slower selling ones. It’s a different story in the used vehicle arena, however, where prices are far more fluid, and are entirely determined by the market.
Pre-owned vehicle prices were holding steady at the beginning of the year, but dropped precipitously in mid-April due to COVID-19 lockdowns. According to Kelley Blue Book, the average used car sold for $19,270 in the days preceding the pandemic’s surge, and subsequently fell to $17,178. Now, with sales of used models on the upswing and supplies short due to a lack of trade-ins earlier in the year caused by faltering new-car transactions, their values have jumped considerably.
The average pre-owned model is now worth $20,245, according to KBB, which is more than $3,000 higher than it was this spring and nearly $1,000 more than it was in the pre-coronavirus period. That means the car, truck, or SUV sitting in your garage is peaking right now in terms of its value, as supply and demand levels are expected to even out in the months ahead.
“Back in mid-April, wholesale used prices hit bottom driven mostly by the lockdown of the business,” says Matt DeLorenzo, senior managing editor for Kelley Blue Book. “But now we’ve seen a full recovery at the wholesale level – auction prices dealers are paying for used cars hit records in June and July. That, along with low inventory, is driving retail prices up.”
The good news is that you’ll get top dollar as a trade-in or in an outright sale, especially for a late-model ride that’s in top shape. Even if you’re not thinking about divesting a model from the family fleet or trading up to a new car or better used one, it’s still prudent to monitor your vehicles’ values. Automotive valuation websites like KBB generate estimates based on the specific year, make and model, mileage, features, and condition. With databases that are updated frequently, both sites base their estimates primarily on data collected from wholesale auctions, both independent used-car and franchised new/used-car dealers, car rental and other fleet customers, leasing companies, and consumer private party transactions, among other factors.
On the down side, as we documented in a separate post, with more buyers returning to new-car dealerships and inventory levels lower than in recent years due to production delays this spring, shoppers can expect to see automakers’ incentives and dealers’ discounts dwindling in the near term on all but the slowest-selling models.
What’s more, high resale values can also mean steeper prices on a used-car lot, though elements of supply and demand still come into play. According to an analysis of nearly 1 million used car sales in July and August conducted by the autos website iSeeCars.com, luxury cars and sports cars are showing the greatest increases, while economy cars and sedans are actually showing nominal price decreases.
“Dealers don’t need to be as competitive with the pricing of luxury and higher-priced vehicles because shoppers at these price points likely aren’t as bargain-conscious as those looking for more affordable and practical used cars,” says iSeeCars CEO Phong Ly. “Subcompact cars are the lowest-priced used cars available, so it’s likely that shoppers interested in these vehicles are looking for a deal.”
Here are the used vehicles iSeeCars.com determined have shown the greatest price increases from July and August, along with the average percentages they’ve jumped:
- Dodge Challenger: +9.0%
- Land Rover Range Rover Sport: +8.9%
- Volvo S60: +8.6%
- Lexus RX 350: +8.4%
- Land Rover Discovery Sport: +7.9%
- BMW 4 Series: +7.9%
- BMW 7 Series: +7.6%
- Volvo XC60: +7.6%
- Ford Mustang: +7.2%
- Land Rover Range Rover Evoque: +7.0%
On the other hand, some models in lower demand are bucking the trend by showing average price drops, according to iSeeCars.com data:
- Chevrolet Sonic: -2.3%
- GMC Yukon XL: -1.9%
- Chevrolet Spark: -1.8%
- Ford Fusion Energi: -1.8%
- Ford Ecosport: -1.1%
- Mazda Mazda6: -1.1%
- Porsche 911: -1.1%
- Hyundai Elantra GT: -1.1%
- Lincoln MKZ: -1.1%
- Nissan Altima: -0.8%
You can read the full Kelley Blue Book report on used vehicle prices here. You can examine at the full range of iSeeCars.com data, including how the most popular vehicles are faring in terms of resale values, here.
