A 2017 Ford F-150 XL SuperCrew with minimal options and an odometer cranked up to 85,000 miles. A basic work truck with scarce feature comforts and heavy mileage. It’s not the worst truck out on the road, but it’s certainly not the best either. This truck sold brand-new for just over $30,000. After a few years of heavy abuse, surely this vehicle wouldn’t hold much of its value… Right?
Fast forward to the beginning of 2022- comparable trucks are selling from $19,000 – $21,000 on dealership lots. It’s five years with nearly 100,000 miles tacked on, and back it’s on the market for only 30% less than its original MSRP. This isn’t some mix-up in pricing made by a new salesman, this is the reality of the used vehicle market, and it’s happening everywhere.
The used vehicle market of the past had stayed relatively consistent, fluctuating very subtly in pricing throughout the years. However, a few months after the Covid-19 pandemic, used vehicle prices continually increased. As of today, prices are over 40% higher than pre-pandemic prices. A multitude of long-lasting factors contributes to market woes. Manufacturers face worker shortages, supply shortages, and general assembly slowing as they adapt to meet CDC guidelines. These factors still impact the market today – most notably through the micro-processing chip shortage, which are necessary for modern automobiles. Simply put, the demand for new vehicles is much higher than the supply. As a result, more and more people in need of vehicles are forced to purchase pre-owned instead. These vehicles are flying off the lot, causing dealerships everywhere to scoop up used inventory as they struggle to get new vehicles and rapidly sell their used ones.
This hyper increase in used vehicle sales is forcing an increase in pricing as used vehicle inventory gets lower. This makes it an amazing opportunity for those selling their vehicles. They will get top dollar, possibly even making a return on investment, since dealerships know they will be able to flip the car or truck in no time, regardless of the price. For those searching for a new vehicle, it may be best to wait in hopes that the market will find its way back to normal, and the price of used cars and trucks will begin to represent what they were pre-pandemic. Those who cannot wait may benefit from looking at a new vehicle rather than a pre-owned one, as the pricing gap between them is not as severe as it used to be.
The markets all around are facing extremes as supply lines take a hit from their pandemic lows. Fortunately, it is only a temporary situation as we slowly but surely, return to normal.
*Increase in used vehicle prices sourced from CarGurus.com*
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