A used-vehicle auction. Since the COVID-19 pandemic, used cars and trucks are also commonly sold … [+]
Photo: KAR Global
Wholesale prices for used cars and trucks — a leading indicator for consumer used-vehicle prices — are still through the roof due to continued high demand and low supply, according to the latest monthly report from used-car auction firm KAR Global.
“The average price of a vehicle sold at physical auctions is now more than $5,000 higher than this same time in pre-pandemic 2019,” said Tom Kontos, chief economist for KAR Global, which is based in Carmel, Ind.
The high demand includes demand from rental-car fleets, which are adding to their fleets again, to meet a recovery in demand due to increased travel Kontos said.
Used-vehicle supplies are low, especially for newer models, because pandemic related shutdowns depressed auto production last year, followed by a computer chip shortage this year. Fewer new vehicles means fewer used vehicles down the line.
The new-vehicle shortage is also driving demand higher for used vehicles, because many new-vehicle shoppers are switching to used cars, when they can’t find the new make and model they want. In addition, as high as used-vehicle prices are, new-vehicle prices are even higher, well over $40,000 on average, according to J.D. Power.
For the second month in a row, wholesale, used-vehicle prices at physical auctions were above an unprecedented $16,000, KAR Global’s Kontos said in a pre-recorded webinar posted Nov. 30.
Cars and trucks combined, the average wholesale auction price was $16,318 in October, up 30.4% vs. October 2020, and up 46.5% vs. pre-pandemic October 2019, KAR Global reported on Nov. 30. The average used car was $12,311, up 36.1% vs. a year ago, and the average truck was $18,933, up 26.4% vs. a year ago.
Some particularly desirable product segments, such as 3-year-old cars and trucks with 36,000 to 45,000 miles on them, are up even more, KAR Global said.
Those characteristics describe vehicles returning from leases, which are often reconditions to factory requirements, given an additional factory-backed warranty on top of any remaining original warranty, and sold as certified pre-owned vehicles.