Used car and truck dealers have bought models for more than the original sticker price.
Jim Watson / AFP via Getty Images
- Used trucks were being sold in a red-hot market above their original sticker price, The Associated Press reported.
- A supply shortage due to plant closings and a global shortage of chips in new vehicles have contributed to price increases.
- However, prices rose more slowly this week, according to vehicle data site Black Book.
- Check out Insider’s business page for more stories.
Some car dealers have been selling used trucks for more than the original sticker price due to soaring demand and a global shortage of chips needed to make new cars, The Associated Press (AP) reported.
Used car prices rose an average of 30% over the past year, according to the AP, according to auto data site Black Book.
Black Book senior vice president of data science Alex Yurchenko told AP that he found 73 models of vehicles between one and three years old that were sold at auctions for a price higher than their original price.
“The market is very strange right now,” Yurchenko told AP. “Dealers need the inventory, so they pay a lot of money for their vehicles in the wholesale market.”
The sticker price of a vehicle is the manufacturer’s recommended retail price.
While many of the models were high-quality trucks and SUVs, like the Ford F-150 Raptor pickup, Yurchenko told AP that he had also found moderately priced vehicles that sold above their sticker price. For example, Yurchenko found a 2019 Toyota Tacoma SR double-cab pickup truck that originally cost $ 29,000 and was nearly $ 1,000 more in 2021, AP reported.
“Before we get through this, prices for many mainstream vehicles will approach their manufacturers’ suggested retail prices,” Yurchenko told AP.
The inflated prices are due to vehicle delivery bottlenecks caused by plant closings last year, a global scarcity of car chips and strong demand in the vehicle market, which even results in some sellers making profits on cars with defective engines.
Used car prices rose 7.3% in May, and used car price hikes accounted for about a third of headline inflation, according to the Bureau of Labor Statistics.
And used car prices have also skyrocketed across the Atlantic – the British Vehicle Remarketing Association (VRA) reported double-digit price increases and forecast further price increases in recent months.
“We are in a kind of ‘perfect storm’ where inventory is very low, demand is high and buyers are willing to spend freely,” said VRA Chairman Philip Nothard. Nothard said dealers are also happy to sell older vehicles than they would have before.
The rise in used car prices in the US has slowed, with used cars up 0.75% last week – the lowest weekly increase in 17 weeks, Black Book told AP.