Used Car Prices Have Yet to Downshift

Above-Average Average

As of February, the average price of a used car was $26,068. While this is down from last year’s record of over $28,000, it’s still a drastic increase from the average pre-pandemic price of $22,000.

Although the pandemic has now subsided, used car prices remain stubbornly high. Unfortunately, insiders maintain these prices are unlikely to return to pre-pandemic levels anytime soon.

What’s Going On?

During the pandemic, many automakers shut factories down for weeks, if not months, on end. These shutdowns were further impeded by an ongoing semiconductor chip shortage, which made it even more difficult for automakers to get new cars on the lot. Together, these factors had a significant impact on vehicle production.

Since there were fewer new cars produced during the pandemic, there are now fewer used cars on the secondary market. The result of these lower inventory levels, coupled with steady demand for used cars, means that prices have increased across the board.

Looking Forward

Used vehicle inventory is still down 26% from pre-pandemic levels. For consumers, this means that buying a used car may continue to be a major expense for the foreseeable future.

One impetus for a drop in car prices would be if automakers produce more new cars, meaning there would eventually be more used cars. While analysts do expect automakers to increase production this year, manufacturers enjoy larger profits when there are fewer vehicles, therefore it’s not necessarily in their best interest to overbuild.

Even if auto production did reach normal levels, it would take years for those new cars to hit the secondary market. Cox Automotive predicts used car prices won’t reach pre-pandemic levels until 2026 at the earliest.

For now, consumers with reliable transportation may want to consider servicing their vehicles frequently to ensure they last as long as possible. And, for those in the market, be prepared for sticker shock, even when checking out older used vehicles.

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS23032802