According to a new report, used car prices have risen by an average of 40% over the past year, although the cost of some of them has even risen by 69%.
The three-year-old Dodge Grand Caravan, Nissan Versa and Toyota Prius are up more than 60% from their prices a year ago, according to research firm Edmunds, which lists the top 10 used cars that have jumped in price.
Used car prices have skyrocketed because of the slowdown in new car production due to ongoing supply chain issues, inflation, and a shortage of semiconductor microchips. The fall in the production of new cars, in turn, has created a strong demand for used cars.
All 10 used vehicles listed by Edmunds have risen in price by more than 50%, with the Dodge Grand Caravan topping the chart, climbing a whopping 69% from $15,227 in January 2021 to $25,789 last January. The Nissan Versa is trailing with a 66% increase from $9,842 last year to $16,366 this year.
Next comes the Toyota Prius with a 61% increase from $17,869 to $28,758, while the Kia Forte is in fourth place with a 58% increase from $12,008 to $18,928. The Volvo S60 rounded out the top five with a 56% increase from $21,502 to $33,647.
Used car prices have risen sharply over the past year, according to research firm Edmunds, which lists the top 10 most expensive used cars.
The Dodge Grand Caravan topped the chart, climbing a whopping 69% from $15,227 in January 2021 to $25,789 last January.
The Nissan Versa is trailing with a 66% increase from $9,842 last year to $16,366 this year.
Next comes the Toyota Prius, up 61% from $17,869 to $28,758.
The Kia Forte is fourth with 58% from $12,008 to $18,928, while the Volvo S60 rounds out the top five with a 56% increase from $21,502 to $33,647.
The next top five is the Chevrolet Sonic, up 55% from $11,913 to $18,473, followed by the Mazda 3, up 54% from $15,011 to $23,140. The Audi A6 also rose 54% from $31,272 to $48,066, while the BMW i3 saw a 53% increase from $21,034 to $32,115. And finally, the cost of Kia Rio has increased by 51% from $11,182 to $16,937.
Carl Quintanilla of the Wall Street Journal tweeted the list with the caption: “There’s inflation, and there’s Dodge Grand Caravan-style inflation.”
It’s not clear why the Dodge Grand Caravan posted such a higher increase in value than the average used car, which saw a 40.5% increase in value, according to the US Department of Labor.
Instead of looking for the most extravagant cars, bargain-hunting Americans are now looking for the most affordable options, Ivan Drury, senior manager at Edmunds, told the Wall Street Journal. He added that it gives more market power to those who want to get rid of their old cars.
“We’ve never seen used car prices so high,” Emily Voss, a CARFAX spokeswoman, told ABC7. “If you’re looking to buy a used car in the coming months, you can expect to pay extra.”
“And there are a few things that have influenced that since COVID started. But I would say that the used car market is most affected by the new car market,” added Voss.
The slowdown in new car production is partly due to the ongoing shortage of microchips in various industries.
Used car prices have skyrocketed because of the slowdown in new car production due to ongoing supply chain issues, inflation, and a shortage of semiconductor microchips.
The fall in the production of new cars, in turn, has created a strong demand for used cars.
The crisis may not subside any time soon as Advanced Micro Devices CEO Lisa Su predicts that the semiconductor microchip shortage will likely continue through much of 2022.
The ongoing worldwide shortage of microchips arose from trade tensions between the US and China and supply disruptions caused by the coronavirus pandemic.
Cars are increasingly dependent on semiconductor chips for everything from computerized engine control for better fuel economy to driver assistance features like emergency braking.
“There is huge investment going on in the semiconductor industry, whether you’re talking about wafers, some substrates, or in-house assets. So we’re making progress,” she told Yahoo Finance.
“I believe the first half of this year will continue to be quite busy. But in the second half of this year, I think things will improve a bit,” Su added.
Demand for microchips jumped 17% from 2019 to 2021, according to the US Treasury Department, which also found that the average stock of semiconductor products has dropped from 40 days in 2019 to less than five days in 2021.
Industry players are seeking help in the US$52 billion Generating Beneficial Incentives for America’s Semiconductor Manufacturing Incentives (CHIPS) Act, which aims to provide financial incentives for microchip manufacturing.
The Senate signed the law into law in June 2021, and it is currently still on the floor of the US House of Representatives.
AMD continues to do its part to address the shortage by working with key manufacturing partner Taiwan Semiconductor to secure the needed supply of its microchips.
And its competitor, Intel, is investing billions of its own money to build new chip manufacturing facilities. On Tuesday, the company announced it was acquiring Israeli chip maker Tower Semiconductor for $5.4 billion.
The jump in used car prices has been accompanied by a surge in US wholesale inflation, which has surged 9.7% over the past year, the Associated Press reported Tuesday.
The producer price index for final demand, which measures inflation before it reaches consumers, jumped 1 percent last month after rising just 0.4 percent in December, the Labor Department said Tuesday.
Companies facing higher wholesale and raw material costs have passed the higher prices on to consumers without hesitation, and recent data suggests that further increases are expected at the retail level.
The government said last week that consumer-level inflation rose 7.5% over the past year, the highest in four decades. The 7.5% increase in the consumer price index affected the economy, from food and furniture to apartment rent, airfare and electricity.