The microchip shortage is driving up used car prices across the board, but I didn’t expect that one.
Those of you out there in the market for a car right now, I can sympathize. I’m still shopping around, but our friends over at iSeeCars really ram the point home analyzing 1.2 million used car sales that right now is a terrible time to buy a used car. On average, used car prices have increased 16.8% over the past year. That amounts to average transactions $3,926 higher than they were last April, and already-stupidly-expensive cars like the Mercedes-Benz G-Class throw off that curve substantially. It’s not just pricey exotics, either — even historically cheap wheels like the Mitsubishi Mirage are substantially more expensive.
As new car inventory continues to dwindle and retail customers scrap with each other and rental car companies over what’s left, iSeeCars cover the worst used cars to buy right now, as of April 2021 (the last month data was available).
Top 10 WORST cars to buy right now
While the average transaction prices across the 1.2 million used cars iSeeCars analyzed went up 16.8%, all the vehicles here solidly beat that mark. In fact, the least impacted car in the top 10 “worst” used buys is the Range Rover Sport, as average prices on that model only went up 25.1%. I never thought I’d frame a Range Rover Sport as a value buy against the Mitsubishi Mirage, but in terms of relative price change over the past year, it technically came out better…if only slightly. Mind you, the Mirage is still by far the cheapest used buy on this end of the spectrum.
It’s not just cars, either. Trucks are popular as ever, and the current lack of choice in new inventory and dealer incentives are driving people to seek better deals on second-hand buys, driving up used prices in turn. On the flip side, if you have one of these cars and you’re looking to sell, you could get top dollar right now.
|Rank||Model||April 2021 Avg. Price||$ Change From 2020||Year-over-Year % change|
|4||GMC Sierra 1500||$42,347||+$9,418||+28.6%|
|6||Chevrolet Silverado 1500||$37,324||+$7,960||+27.1%|
|10||Range Rover Sport||$59,579||+$11,969||+25.1%|
According to iSeeCars‘ Executive Analyst Karl Brauer, inventory issues aren’t the only factor driving up used car prices. In the case of more expensive, luxurious cars like the S-Class or Range Rover Sport are seeing greater demand because buyers have more money to spend as they cut back on travel and entertainment during the COVID-19 pandemic. In the case of the Mitsubishi Mirage, he surmises that values are shooting up not just because of increased demand, but lower average mileages on used examples than last year. Folks were driving less between spring and summer 2020, so fewer miles on their cars make them more valuable to prospective buyers.
Other cars hardly changed at all from this point last year.
There still are some smarter used buys out there if you’re looking for a used car now and don’t want to pay through the nose. Some subcompact crossovers, for example, have hardly moved from where they were last year. Other models that haven’t been as popular over the past few years also aren’t seeing inflated values, as buyers either gravitate toward more luxurious cars or — in the case of the Tesla Model S — more affordable alternatives.
That’s good news if you’re a bargain hunter, as even in times like this you can still find a deal. You just may need to compromise a bit on what models you’re shopping for, and where your priorities are in terms of having a hot-ticket car like a Range Rover Sport (instead of, say, a Volvo XC90).
Inversely to the worst cars to buy above, if you have one of these cars you won’t necessarily see a huge pay day if you try to sell it right now. That said, most cars here did still see an uptick in value, so at least you won’t get killed on depreciation.
|Rank||Model||April 2021 Avg. Price||$ Change From 2020||Year-over-Year % Change|
|1||Tesla Model S||$53,212||-$1,077||-2.0%|
All the cars here fall well under the 16.8% or $3,926 that average transactions increased over the past year. Brauer points out, “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 the price hikes.”
Of course, if none of these models appeal to you and you’re in a position to do so, the best recourse right now would be to wait. While analysts are shouting from the rooftops and through every other means they have to hand, the supply constrictions won’t last forever. More foundries will come online, demand will drop, and we should see the issue abate in a few months’ time. It’s tough to say exactly when we’ll hit that equilibrium, but hopefully the new and used car markets will cool off as life generally returns to normal.