If you’re in the market for a used vehicle, you’ve probably discovered they aren’t as affordable as they used to be.
While it’s no secret that new vehicles are getting more expensive, so are used cars. Citing data from Edmunds, Reuters reports the average ten year old vehicle now costs $8,657 in the United States.
That’s a jump of 75% from 2010. More importantly, the increase is three times higher than the average price of a new vehicle which has only climbed 25% over the same time period.
Also Read: Used Car Prices Are Rising When They Should Be Dipping
So what’s to blame for the massive increase in used car prices? Reuters says that can be traced back to the Great Recession. In the auto industry, it’s best known for the bankruptcies of Chrysler and General Motors. However, it also caused many automakers to curtail production as millions of Americans lost their jobs.
Carsalesbase data shows automakers typically sold around 16.5 million vehicles annually in the United States in the early to mid 2000’s. However, that changed in 2008 when sales dropped to 13.2 million units. The negative trend continued into 2009 as consumers only snapped up 10.4 million vehicles. It wasn’t until 2014 when sales fully recovered and hit 16.5 million units once again.
Given the rules of supply and demand, it’s not surprising that used vehicles are more expensive as there are fewer models to choose from. Unfortunately, the situation isn’t going to improve soon as CarGurus’ director of automotive industry analytics, George Augustaitis, told Reuters “available inventory of vehicles costing under $10,000 will not return to more normal levels until 2022.”
This puts consumers in a difficult situation and some buyers are turning to high-mileage used vehicles which are typically more affordable. While they cost less than their lower mileage counterparts, buyers will likely need to shell out more for service and maintenance.
