If you ever step into a car showroom, you will notice that a 2019 Toyota Tacoma would be priced at just about $29,000. However, two years later, there are dealers paying about $1,000 more for the same car, after being used. They are then reselling it to their customers for over $33,0000. This is the crazy world of truck and car sales in the U.S. Why such irregular price ranges? Blame the pandemic that caused a shortage of many things and driven up the prices to unbelievable levels.
Used Vehicles More Expensive Than New Ones
In the past year, used vehicle prices on average have climbed 30%, according to Black Book, which tracks car and truck data. That’s created many crazy situations where high-demand vehicles are selling for more than their original prices when they were new, said Alex Yurchenko, the company’s Senior Vice President of Data Science. He further stated that dealers were paying such high prices because they needed the inventory. The increase in prices of used vehicles shot up by 10% in April and 7.3% more in May. As per Edmunds.com, an average second-hand vehicle now costs $26,457.
Reason Behind the Price Hike
Due to the pandemic, automakers had to shut their factories for about eight weeks in order to help curb the spread of coronavirus. This brought production to a halt and limited the inventory of car showrooms. However, the demand remained high and the lack of new vehicles drove people towards used vehicle dealers. And lack of options forced people to pay the high prices too. They did not have a lot of choices.
Back to Normal
However, car companies soon restarted their factories to meet the rising demand for automobiles. This means that used vehicle prices will soon have to push back their prices and go back to their normal rates. With car companies resuming production, dealers will have new inventory to make sales.