After shockingly high used-car prices during the pandemic-induced chip shortage, prices are now coming back down.
Key Details
- During the pandemic shutdown and subsequent supply-chain disruptions, new cars were unavailable due to chip shortages, causing used car prices to skyrocket.
- High used car prices were one of the most visible signs of inflation.
- Now, used car prices have declined for the fifth straight month.
Why it’s news
Supply-chain issues made purchasing a new vehicle difficult for buyers. If a buyer could find one, he would likely be delayed on taking the vehicle home until a chip for the vehicle could be imported.
As a result of these delays, used cars were in high demand, driving up prices significantly. In February of 2022, used cars were 40% more expensive than the year before.
But now, prices are on the way down. Used cars are now averaging around $24,000—a 15% decrease from January’s peak prices.
Though used car prices were markers for inflation in early 2021, costs for services and housing are now the main driver of inflation—meaning used car prices don’t necessarily indicate a break from inflation.
With used-car prices coming down and housing prices beginning to shift, consumers could start to see some lower prices all around before too long.
