By: Gov Auctions | 9 August 2021

Used Car Prices in the USA - A Covid-19 Delta Update

There is a record-breaking rise in the used car prices in the USA after the pandemic of COVID-19. If you're looking for a used car, you've undoubtedly noticed that they're more costly than usual.

Supply disruptions caused by the coronavirus pandemic have raised the prices, indicating that the market is favorable to sellers but not so much to the new car purchasers. Some experts have predicted when the expenses will begin to fall, while others believe it is uncertain how long they will remain high.

Used cars are in limited supply, which has resulted in skyrocketing costs in Los Angeles and around the whole country in the USA.

According to the National Automobile Dealers Association, the average price of a used car soared by 12.5% between last year and this year, rising from $21,020 in February 2020 to $23,643 in February 2021. The average list price was $22,963, 12% higher than a year ago and 14% higher than two years ago.

According to Ivan Drury, an auto industry researcher for explained to CNN that currently, used cars sell for 70% to 80% of their sticker price, which has increased from 65% to 70% in 2019.

As per the director of residual values at Kelley Blue Book, Eric Ibara told that if you have an extra used car to sell, there may never be a better time than this. However, professionals in the automotive sector provide their advice to help buyers and sellers negotiate the present market.

What are the reasons behind this price rising in the Used car industry in the USA?

Several reasons contribute to the scarcity of used cars on the market. Let's have a look at the below:

• One of them is the impact on the rental car business. Typically, rental car businesses sell their cars after 12 to 18 months. This is a significant supply of used vehicles. However, as the epidemic began to restrict travel, rental car operators suffered a considerable loss and immediately destroyed substantial portions of their fleets without purchasing replacements.

According to the vice president of the National Independent Automobile Dealers Assn., Larry Dixon, Sales into rental fleets were reduced 50% last year, which indicates after 12 to 18 months, supplies going into the used-car market would be dropped another 50%.

• Another important factor is demand. People were hesitant to acquire cars for the majority of the epidemic. But it is changing as vaccination rates go up and restrictions are abolished. Dixon stated, "Humans have the worst case of cabin fever. They are willing to drive and go somewhere.” But there were fewer demands in the past two years during the pandemic. Most of the people were struggling to save their jobs, and buying a new car at that moment was not a wise decision to look at.

However, there is a dearth of new cars for the no demands during a pandemic. Vehicle manufacturing has been slowed owing to a global semiconductor deficit. As a result, some customers who would ordinarily buy a new vehicle instead opt for used alternatives.

• Semiconductor scarcity- The chip shortage has disrupted the supply of microchip processors used by car manufacturers for new vehicles. The chips control everything on a car, from infotainment panels to window motors. According to many researchers, it is the primary cause of the present rigidity in the new and used-car markets.

CNBC says that when dealerships and vehicle manufacturers stopped at the onset of the epidemic, chipmakers turned their attention to gadgets such as laptops and video gaming consoles. They are now struggling to catch up with growing demands from the automotive industry.

The chip deficiency is worsened by a year's worth of pent-up demand from individuals starting to go out again. Now the worst of the epidemic appears to have passed.

• According to, when new car inventories dropped, buyers switched to used cars, placing pressure on supply and increasing costs.

• Sometimes, the value is impacted by the demand for a specific car model. For example, Pickup trucks and big SUVs are in great demand, but sedans are declining in popularity. As a result of the pandemic's pent-up demand, costs have jumped across the board.

• Economic Uncertainty- Consumers tend to be drawn toward used vehicles during a recession of COVID-19. When there is a lack of economic uncertainty, at that time, investing in a new car doesn't make any sense because your job is at risk.

• Many essential employees who would usually take public transportation suddenly opted for driving. Instead of using public transit, they feel safe driving their car. Due to the widespread of Coronavirus, people decided to focus on cars while avoiding public transportation. As a result, there's a high rise in the prices of used cars in the USA.

• Factory shutdown in early 2020 reduced new car options, causing more buyers to turn to the secondhand market.

• Among other considerations, delaying car payments are another great factor to be considered. Banks in the USA have allowed customers to postpone car payments during the epidemic, resulting in fewer used cars hitting the market through foreclosure. People are also trading in their old cars at a lesser rate.

Prices for used cars are predicted to increase in the coming months. That’s why, if you are going to buy a used car now, there is no better time! All indicators point to costs rising further and the Delta variant is elongating the supply issues from manufacturers.

On the other hand, according to some experts, it's a fantastic period to trade or sell a used car. Used cars are increasing in value, which doesn't happen very often. Check online to know the worth of your used car before selling. It will help you to get some fundamental ideas.

When are prices likely to drop again?

However, experts predict that demands for used cars will continue to increase throughout the autumn, and there aren't many choices available to consumers. Anyone who is hoping for prices to be dropped may have to wait a while.

Consequently, as firms reopen and stimulus cheques and tax refunds are put into customers' bank accounts, new-car availability is anticipated to restrict further in the coming months. As a result, demand for used cars will rise.

According to Consumer Reports, the market will ultimately calm down, and it may take a little time. In their opinion, if you want to invest right now, do your research first on new valuations and offers on the current market prices and be open to evaluating many models to maximize your chances of scoring big savings.

J.D. Power, a consumer intelligence firm, forecasts that used car prices would continue to rise long after the epidemic goes away. This, however, should proceed quite slowly and continue for a reasonable period.

The present pandemic-related rapid increase is an exception. Regardless, enhanced technology features, increasing production costs, and pandemic-related inventory concerns should keep used car prices on the rise for the coming years.

This indicates that 2021 will most probably not be a regular year in terms of discounts, according to Ron Montoya, the senior consumer advice editor at Edmunds experts urge buyers to start shopping for a new car sooner than expected.

According to Ibara, it is one of the rarest situations in his 30 years of working career when selling a used car is getting more priority than buying a new one. Usually, it may be tough to sell a used car to get a new one. He has never experienced a car market as heated as this one ever!