Used car prices broke records in 2021, but that didn’t keep Americans from lining up for them. Americans bought an unprecedented 40.9 million used vehicles last year. That’s 10% higher than 2020’s numbers.
The figure comes from Kelley Blue Book parent company Cox Automotive.
Record Sales Despite Record Prices
The sales record comes despite record-high prices. December’s numbers aren’t final yet, but Cox Automotive estimates that the average used car sold for $27,569 in November. At the start of 2021, that same figure stood at $21,572.
That’s an increase of $5,997, or nearly 28% in one year.
New Car Shortage = Run on Used Cars
The average used car price spiked due to a host of factors.
Americans slowed their car shopping dramatically in 2020, as the COVID-19 pandemic kept millions off the roads. When vaccinations and government stimulus began to reawaken the economy in 2021, America went car shopping.
But a worldwide microchip shortage limited the number of new cars automakers could build. With high demand and low supply, prices for new cars soared.
That sent many would-be new car buyers into the used car market, causing the ceiling on used car prices to rise. A second force raised the floor.
Waves that hit the new car market ripple through the used car market years later. Automakers built fewer cars for several years after the 2008 recession. That left a thin nationwide supply of the older, higher-mileage vehicles dealers sell for under $10,000.
With fewer cheap used cars available to sell and buyers flooding the used car market with new car money to spend, prices set records. But that didn’t drive buyers away.
Record Could Stand for Years
It’s a record that will probably stand for a long time. Cox Automotive is forecasting 39.3 million used car sales this year.
Even after the microchip shortage eases, it will continue to affect the used car market for years. Just as the post-2008 slowdown meant fewer used cars available to sell today, the 2021 production slowdown will mean fewer used cars available in future years.
