Average used car prices are up 25% in Chattanooga from a year ago as shortages of computer chips and other supplies limit the inventory of new cars and car replacement parts.
A new study of more than 1.9 million car and truck sales last month by the online website iSeeCars found the typical used vehicle sold in Chattanooga in November for $6,410 more than the average used car price a year earlier. Nationally, used car prices rose even more, increasing an average 27.9%, or $6,939 compared to last year.
“Used car prices had drifted down, slightly, since they peaked in June, but they are back on the rise again,” said Karl Brauer, an analyst for iSeeCars. “With microchip shortage-related plant shutdowns persisting throughout the year, automakers have not kept pace with pent-up demand, and lingering supply constraints that are expected to continue well into 2022.”
Brent Morgan, president of Integrity Automotive Group, who has worked in the automotive industry since 1984, said he has never seen a market like this one.
“A lot of it is driven by supply and demand, and with fewer new cars available in relation to the demand, more people are choosing to buy a used car instead, and fewer used cars are being traded in,” Morgan said. “We think it should get a little bit better next year, but the change is certainly not going to be immediate.”
Popular new car models are currently worth more than their manufacturer’s suggested retail price, and that is helping to push up prices for nearly all vehicle models.
Despite the higher prices, some car buyers paying for popular new models, are also able to get more for used vehicles they may trade in for their new cars, Morgan said.
“It still may be a good time to buy because of the extra trade-in value on used cars along with attractive interest rate financing,” Morgan said.
Jason Wright, a third-generation manager for the 48-year-old Wright’s Motors on Rossville Boulevard, said the used car market currently is as tough as it has ever been.
“There just aren’t many cars out there, so those that are on the market are costing us more,” Wright said. “We’re paying 30% or more in some instances.”
Nationwide, the vehicles with the greatest price increase are primarily small, relatively affordable cars.
“Small cars have become the only affordable used car option for a growing segment of the population, and their price increases reflect the high demand these otherwise low-demand vehicles have experienced in recent months,” Brauer said.
The vehicle with the largest price increase across the country last month, according to iSeeCars, was the Nissan LEAF, which has risen in price by 64% since November 2020.
“While used car prices for all-electric vehicles have increased in recent months, the dramatic increase for used Nissan LEAF prices could be attributed to the 2018 model, which featured a significant bump in EV range, performance improvements and an exterior facelift, and which only just entered the market this year in substantial numbers,” Brauer said.
Contact Dave Flessner at [email protected] or at 423-757-6340.
Used cars in Chattanooga with the biggest price increases
1. Toyota Camry, up 36.3%, or $6,853
2. Chevrolet Equinox, up 32%, or $5,712
3. Jeep Renegade, up 31.1%, or $5,170
4. Nissan Rogue, up 30.9%, or $5,532
5. Nissan Altima, up 28.1%, or $4,397
Source: iSeeCar’s price comparisons from November 2020 to November 2021