Used car prices are increasing at a quicker rate than new car prices, and experts are raising the alarm.
“I don’t care what the price is for a new car, a used car, an old used car, or a trade-in. If you’re looking at automobiles in general, you’ll notice that they’re becoming more expensive “Ivan Drury, senior manager of insights at Edmunds.com, spoke with FOX Business’ Jeff Flock.
The automobile valuation expert responded to recent US Department of Labor statistics indicating that used car prices have increased over 40% year over year. Additionally, new automobiles are up 13%.
“Nothing, absolutely nothing, comes close to what we’re witnessing today in the market,” Drury said.
THE PRICES OF NEW AND USED CARS ARE NOT GOING TO DROP ANY TIME SOON
A three-year-old Dodge Grand Caravan is now worth more than $25,000, up 69 percent from a year ago, according to Edmunds data. A Nissan Versa of comparable age cost $9,842 in January, but has now jumped by 66% to an average of $16,366.
The increasing prices are being driven by a global shortage of computer chips, increased labor and production expenses, and supply chain delays.
“You could actually trace 90 to 95 percent of this manufacturing problem to the chips alone,” Drury remarked.
While some firms, such as Ford, have claimed that the chip shortage could be resolved this year, dealers do not expect pricing to stabilize until 2023.
“This is a dealer’s market, a seller’s market, and we’ve seen that consumers are paying significant premiums to purchase a car,” Cox Automotive’s Mark Schirmer told FOX Business.
“New car costs will not continue to rise at the same rate as they have, but we also do not anticipate significant declines in new or used car prices in the near future,” he said.
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