Used car prices reach record highs

Dealers selling and buying more vehicles on marketplaces like OfferUp

With slim vehicle inventories nationwide, shopping for cars has been difficult. In fact, new vehicle sales have slowed in November with J.D. Power indicating that November will see a 14.8% decrease in sales compared to last year. The decrease in new car sales is due to continuing low inventory and high demand as shoppers compete for new vehicles. In fact, Thomas King, president of J.D. Power data and analytics said, "new vehicle sales are being constrained by available inventory with retail inventory below 1 million vehicles for the 4th consecutive month."

With limited new inventory, many car buyers have turned to used vehicles as their next best option. However, while there is inventory available, car buyers are encountering record used car prices. In fact, according to the Manheim Index, used car prices have risen 4.9% in the first fifteen days of November and over 44% compared to November of last year.


How crazy can it get?

In a recent Washington Post article, paying thousands more on old vehicles with high mileage is now the norm.

The 2019 Honda Civic that kicked off a used-car auction earlier this month would have been nothing special before the pandemic. But as automotive dealer Brad Wimmer watched, the online bidding quickly became, to quote him, “bananas.”

As a new car, the Civic would have had a sticker price of around $21,000. But within seconds at the wholesale auction, the two-year-old model, with 4,000 miles, sold for $27,200.

Soon after, a Nissan Rogue fetched what it would have cost new in 2018. A three-year old Toyota Camry with large dents and scratches on its hood sold for $14,200, nearly twice what it would have brought just a few years ago. And a 2015 Kia Sorento sold for $12,600, a staggering amount for a six-year-old car with 83,000 miles.

Even car rental agencies, typically sellers at vehicle auctions, have now become major buyers of used cars because they aren't able to acquire enough new inventory to meet their needs. Many industry experts are predicting that inventory will remain tight well into 2022, and dealers need to be creative to maintain their inventory.

Marketplaces are growing

Many car buyers, and dealers, have turned to online marketplaces to source vehicles. In addition to getting access to a wide range of inventory that matches a user's search, since the Pandemic began, marketplaces have seen exponential growth. Users of apps like OfferUp, have indicated a strong preference for apps with straightforward interfaces, and enable shoppers to see a wide variety of makes and models, engage with dealers or sellers directly via chat and minimize the need to spend hours at a dealership that may, or may not, have their vehicle.

For dealers, marketplaces give them access to thousands of private seller postings in their area. Similar to car buyers, dealers can use the OfferUp marketplace app to chat with private sellers and purchase vehicles.