Photo: The Image Bank Unreleased
Car shoppers hoping to save money by going with a used vehicle could be in for some sticker shock.
The latest numbers show the prices for used cars are going up, and may continue going up. “It’s unusual for prices to go up this time of year,” observed KTRH Car Pro Jerry Reynolds. “Typically this is when prices start to fall as we head towards a new model year of new cars. Not this year.”
The average price for a 1 to 5 year old used car is now up to $32,317. That’s an increase of $630 (2 percent) over what they were a year ago.
One big factor:“The dealers are stocking up on used cars,” said Jerry.
New tariffs are one factor prompting dealers to rev up their inventory, including longtime new car dealerships now carrying used cars too.
But that’s just the latest in a series of cross-currents rocking the market.
“We learned a lot of lessons when covid came along,” Jerry explained. “We learned even more lessons when the microchip shortage decimated inventories. We had new car dealers with no new cars on the ground and the dealers had to get into the used car business in a major way.”
The analysts at iSeeCars projected that the average price for a new vehicle could reach $35,000 in the next few months.
“I think all of us in the industry are expecting production cuts from a lot of the automakers out there and that is driving used car prices up,” Jerry said. “We think there will be a shortage of new cars, or the car companies will cut way back on the incentives to save some money because of the tariffs, and the used car markets are going to go crazy.”
One notable exception to the rising prices is electric vehicles. Several Tesla models saw prices drop from last year.
Car buyers are generally less enthusiastic about used electric vehicles because of concerns about limits on their battery life. Electric car batteries can be extremely expensive to replace. But Jerry says the vehicles may be such a good deal that they’re worth considering.
“You can buy a one year old electric car for roughly 60 percent of the original sticker price,” he said That is a steep depreciation curve. So far, the batteries have proven to be extremely reliable, and we now know some of these cars can go for 200,000 miles without having to replace the battery. That’s how much you can expect out of a gas engine for most cars. If you want to go electric, it’s totally worth it to go ‘used’ right now.”