CARY, N.C. -

The rather unique environment in used cars right now is not only driving up the prices these vehicles are fetching, but it is also having some impact on the rate that their values are depreciating, industry studies show.

Starting with the price tag, a double-whammy of supply scarcity and strong demand has driven the average listing price of a used vehicle up 31%, according to TrueCar, but some models are seeing even steeper gains.

The company looked at used-car listings from September, honing in on 2016 to 2020 model-year vehicles and their average advertised prices on the TrueCar platform.

TrueCar then compared those numbers to the average advertised prices for 2015 to 2019 model-year used vehicles in September 2020.

On average, the price of a used vehicle in this respective group was up 31%.

Drilling down into individual models, the Mini Hardtop had the highest year-over-year increase at 198%, followed by the Volvo V60, whose prices were up 88%.

Prices for the Ford Passenger Wagon were up 79%, followed by the Chevrolet Spark (up 61%) and Ford Cargo Van (up 45%).

The Nissan LEAF had the sixth-highest price increase (up 44%), followed by the GMC Savana Cargo Van (up 42%), VW Beetle (up 41%), Chevrolet Express Cargo Van (up 37%) and Mitsubishi Mirage (up 36%).

TrueCar also looked at the 10 used-vehicle models that had the largest declines/lowest increase in listing price during September.

Topping the list was the Kia Soul, whose prices fell 10% year-over-year. The Honda Clarity was second, with a 2% decrease.

Used-car listing prices for the Volvo XC40 and GMC Acadia were flat year-over-year, while the Genesis G70 and the Infiniti QX70 each were up 2%.

The BMW X2 showed a 3% price increase, with the Kia Niro up 5%.

Rounding out the list was the Hyundai Kona and Honda Passport, both of which showed 7% used-car price increases.

TrueCar also examined the data by state, the results of which can be found in the graphic below:

SOURCE: TrueCar

 

In an emailed analysis, TrueCar boiled down the used-car price escalation to several factors.

Starting on the OEM side, the supply chain disruptions from a year ago have been coupled with a global chip shortage that has hampered new-vehicle production.

Since consumers have less options on the new-car side due to this lack of production, they’re turning to used at a higher-than-normal rate, TrueCar said.

Not only that, a decline in new-car sales means less trade-ins, which downwardly impacts used-car supply.

You end up with lower pre-owned supply and higher demand, thus driving up prices, the company explained.

This higher used-car price dynamic has also affected depreciation rates, as a study from iSeeCars.com shows.

Last year, the average 5-year depreciation rate was at 49.1%. That has slowed to 40.1% this year, according to iSeeCars.

And yet there exists some discrepancies among individual models.

“We’ve seen record high used-car prices over the past 15 months as a result of the microchip shortage, and that has slowed down the average depreciation rate across all vehicles,” iSeeCars executive analyst Karl Brauer said in the analysis. “Vehicles that have historically maintained their value well have depreciated even less this past year, but even in today’s market some cars continue to drastically drop in value.”

In its analysis, iSeeCars shares the 10 vehicles that have the lowest 5-year depreciation rates, as well as the 10 models with the highest rates.

The Jeep Wrangler had the lowest average 5-year depreciation rate at 9.2%, followed by the Jeep Wrangler Unlimited at 10.5%.

“Jeep Wranglers are known for retaining their value due to their enthusiastic fanbase, as well as their durability and performance across all terrains, especially off-road,” said Brauer. “Jeep Wranglers also have maintained their iconic design, so even older models don’t appear dated.”

Coming in third on the list of low depreciation rates was the Porsche 911 (at 12.8%), one of five sports cars to crack the top 10.

The Ford Mustang was sixth (21.0%), followed by the Chevrolet Corvette (22.7%), Chevrolet Camaro (23.6%) and the Dodge Challenger (24.4%), respectively.

“Along with the 911’s timeless design and reputation for reliability, Porsche sells few 911s relative to market demand, so there aren’t many 911s in the used car marketplace,” said Brauer. “The Mustang, Corvette, Camaro, and Challenger are all classic American sports cars with an aspirational appeal for many consumers, and drivers are likely more willing to pay a premium for them, especially because they aren’t as common in the used-car marketplace.”

On the opposite end of the spectrum, two electric vehicles — the Nissan LEAF (65.1%) and the BMW i3 (63.1%) — had the highest 5-year depreciation rates.

“Electric vehicles like the first-generation Nissan LEAF become outdated quickly due to the rapid advancements in range and battery life, as early LEAF batteries were only expected to last eight to 10 years,” said Brauer. “Government incentives like the $7,500 federal tax credit also play a role in the LEAF’s steep depreciation, as its resale value is based on original MSRP, but real-world transaction prices when new are effectively $7,500 lower.”

Of the i3, Brauer said: “The BMW i3 had just 80 miles of range before its 2017 update, and it had a high price tag for its city car designation. The limited market for the i3 led to its recent cancellation, and its lack of popularity, high price tag, and government incentives all contribute to steep depreciation.”

Coming in third was the BMW 7 Series (61.5%), one of five luxury sedans on the list of highest depreciating vehicles.

The Maserati Ghibli was fourth (61.3%), the Jaguar XF came in sixth (59.5%) the BMW 5 Series was No. 7 at 59.1% depreciation and the Audi A6 was No. 8, with 58.2% depreciation. In 10th was the Volvo S60 (57.3%).

“Luxury buyers want to be seen in the latest version of their preferred model, but that status fades quickly after a luxury vehicle drives off the lot, drastically reducing these models’ value on the secondary market,” said Brauer. “Moreover, the popularity of sedans has declined, so the price has to significantly drop to make these vehicles desirable to used-car shoppers to compensate for their high operating costs and outdated technology.”