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

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.

SOURCE: Chart from iSeeCars.com.

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.