Used-car prices show 'unparalleled' growth; high values likely for 'foreseeable future' - JDA.media

Used-car prices show
'unparalleled' growth; high
values likely for 'foreseeable
future'

Thursday, May. 27, 2021, 01:46 PM

PREMIUM CONTENT
By Joe Overby
Senior Editor

CARY, N.C. -
The used-car market is usually a steady one, which makes this year’s price surge all
the more “unparalleled,” as iSeeCars.com details in an analysis released this
week.

For instance, used-vehicle prices climbed just 0.1% year-over-year in April 2020,
according to iSeeCars. In April 2019, they dipped just 0.2%.

However, in April of this year, there was a 16.8% year-over-year spike in used-car
prices.
And while a near-17% jump is nothing to sneeze at, some models nearly doubled
that hike.

“The current used-car price increase is unparalleled, and prices will likely remain
elevated for the foreseeable future due to the magnitude of the global microchip

shortage and restricted new-car supply,” iSeeCars executive analyst Karl Brauer said
in a news release.

The same spikes are being seen on the wholesale side of the used-car market.

In an analysis released Thursday, Jonathan Banks, J.D. Power's vice president of
valuations services, had this to say about the used-car market: “Wholesale prices in
April continued to surge as consumers, dealers and rental companies leaned on
this side of the market to satiate increased used-vehicle demand resulting from
ongoing new-vehicle production challenges.

“As a result, wholesale prices increased at a rapid pace during the past 20
consecutive weeks and are up an unprecedented 37%, while used retail prices are
15% above where they were at the end of 2020,” Banks said. “Used-vehicle prices
have shown no signs of softening and are expected to remain exceptionally strong
for the foreseeable future.”

High risers in pre-owned
Going back to the iSeeCars data, the company compiled a list of the pre-owned
vehicles with the greatest year-over-year price increase in April.

Leading the pack is the Chevrolet Corvette, whose prices soared 33.9% year-over-
year last month.

And while the next five are a collection of Mercedes-Benz models and pickup trucks,
another Chevy sports car (the Camaro) lands at No. 7, with a 26.7% jump in used-
car prices.

“These sports cars are aspirational cars for many consumers, and they surged in
popularity during the pandemic as drivers sought fun cars to combat boredom,”
said Brauer. “Sports cars aren’t practical purchases, so drivers are likely more
willing to pay a premium for them, especially because they aren’t as common in the
used-car marketplace.”

Second on the list was the Mercedes-Benz G-Class, whose pre-owned prices were
up 33.2% in April. Fellow luxury rides on the list included the Mercedes S-Class in
fifth with a 27.9% spike and the Land Rover Range Rover Sport at No. 10, with a
25.1% price gain.

“The Mercedes-Benz G-Class is an iconic luxury off-roader that is associated with
opulence, the Mercedes-Benz S-Class sedan is among the most luxurious sedans in
its class, and the Land Rover Range Rover Sport is a premium and highly-capable
off-road SUV,” said Brauer.

“These vehicles embody luxury and are in high demand, likely because buyers have
additional resources to spend on cars due to decreased travel and entertainment
during the pandemic.”

The law of supply and demand is perhaps most evident in the most populous
vehicle category on the list: pickups, which had four models crack to the top 10.

The Ram 1500 was No. 3 with a 28.8% price hike last month, the GMC Sierra 1500
was next in line with a 28.6% increase and the Chevy Silverado 1500 (at No. 6) saw
its used prices climb 27.1% last month.

The Toyota Tundra came in eighth with a 26.0% rise in used prices.

“The shortage of new truck inventory in the wake of the microchip shortage and the
growing popularity of pickups has led to heightened demand and scarce supply in
the used car marketplace,” said Brauer. “Additionally, people who require trucks for
work are more likely to pay a higher price.”’

Bucking the trend
Of course, not all vehicle models saw such dramatic price growth.

Like its parent company often does on a larger scale, the Tesla Model S bucked the
trend as the only vehicle in iSeeCars data set that saw its used-car prices decline
last month.

Its prices were down 2.0% year-over-year, according to the report.

“The once high-demand Tesla Model S has declined in popularity thanks to more
affordable Tesla models like the Model 3 and Model Y, both of which are
substantially cheaper than the used Model S, even when purchased new,” Brauer
said.

Along those lines, iSeeCars also shared a list, topped by the aforementioned Model
S, of vehicles with the lowest price gains last month.

“While used-car deals are hard to find, they are still out there, or at the very least,
there are used car models that won’t come with as much sticker shock as the
average vehicle,” said Brauer.

He added later in the analysis: “Consumers who are in the market for a used car
should consider these vehicles, which include a mix of vehicle types and price
points because they have not been significantly impacted by price hikes.”

Beyond the Model S, a couple of other alternative-fuel models made the list,
including the BMW i3 at No. 2 with a 0.4% rise in price and the Toyota Prius in sixth
with a 5.4% gain.

“The BMW i3 plug-in hybrid blazed a trail for plug-in hybrids, but has declined in
popularity as more options with more cargo space and better range entered the
market,” said Brauer. “Similarly, the popularity of the Toyota Prius put hybrid
vehicles on the map, but the Prius has also declined in popularity due to increased
competition and a decreasing fuel efficiency advantage over similar models.”

The list of lowest used-car price gains also included three subcompact SUVs and
three luxury SUVs.

The respective lists of used cars with the greatest and smallest price changes in
April can be found below.

Top 10 Cars with the Greatest Price Increases (YoY) - iSeeCars April 2021 Study
                         Average Used Car       $ Price Change       Year-Over-Year %
RankUsed Vehicle
                         Price (April 2021)     from April 2020      Price Change
1    Chevrolet Corvette $68,804                 $17,432              33.9%
     Mercedes-Benz G-
2                        $148,937               $37,161              33.2%
     Class
3    Ram 1500            $35,798                $8,002               28.8%
4    GMC Sierra 1500     $42,347                $9,418               28.6%
     Mercedes-Benz S-
5                        $74,326                $16,198              27.9%
     Class
     Chevrolet Silverado
6                        $37,324                $7,960               27.1%
     1500
7    Chevrolet Camaro $31,220                   $6,582               26.7%
8    Toyota Tundra       $40,470                $8,356               26.0%

9    Mitsubishi Mirage $11,242                $2,313             25.9%
     Land Rover Range
10                     $59,579                $11,969            25.1%
     Rover Sport
Average                $27,297                $3,926             16.8%
SOURCE: Chart from iSeeCars.com.

Top 10 Used Cars with the Smallest Price Changes (YoY) - iSeeCars Study
                    Average Used Car Price $ Price Change from Year-Over-Year %
RankUsed Vehicle
                    (April 2021)            April 2020            Price Change
1    Tesla Model S $53,212                  -$1,077               -2.0%
2    BMW i3         $20,868                 $91                   0.4%
     Subaru
3                   $22,440                 $314                  1.4%
     Crosstrek
     Mercedes-Benz
4                   $35,393                 $709                  2.0%
     GLC
5    Audi Q7        $40,626                 $1,220                3.1%
6    Toyota Prius   $19,087                 $971                  5.4%
7    Volvo XC90     $39,641                 $2,064                5.5%
8    Mazda CX-3     $17,950                 $1,062                6.3%
9    Honda HR-V $18,669                     $1,203                6.9%
10 Subaru Impreza $18,003                   $1,272                7.6%
Average             $27,297                 $3,926                16.8%
SOURCE: Chart from iSeeCars.com.

The data iSeeCars used is from its analysis of more than 800,000 sales of model-
year 2016 to 2020 pre-owned vehicles in April, as well as its analysis of model-year
2015 to 2019 vehicles in April 2020.

Tags:
Used-Car Prices

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