Got an extra car in the driveway you’ve been thinking about selling? There’s never been a better time.
The used-car market is facing a remarkable inventory shortage these days, a side effect of the pandemic. And that’s forcing dealers to pay more for trade-ins (and buyers to pay more to drive something off the lot).
The shortage is the result of a number of factors. Last year’s flurry of stay-at-home orders hurt the rental car business, whose autos used-car dealers typically pick up at auction or through partnerships with rental companies. At the same time, many people are using their stimulus checks to help them buy new vehicles. As a result, supply is down, and demand is up.
During the week ended April 4, there were 2.1 million used cars for sale in the U.S., according to the Los Angeles Times. That’s down 25% from the same week in 2020 and 22% lower than the same period in 2019. List prices were up 12% from a year ago.
Rental car companies put buying on hold last year, when the cars sat on lots unused for months. That buying is slowly resuming, but dealers say they expect the shortages to get worse throughout the year as things normalize. The number of repossessed cars was down last year, too, further contributing to the shortage. And the rate of normal trade-ins was slower as well.
For consumers looking to unload vehicles, that can mean hundreds or thousands of dollars more than usual, depending on the market and the scarcity of vehicles. But like the red-hot housing market, if you’re also looking to replace what you’re selling with a new one, you’ll likely see bigger out-of-pocket expenses when all is said and done.
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