Expensive Ride: Used Car Prices Surge to Historic Level

It's like a perfect storm for the auto industry. The semi-conductor chip shortage combined with supply chain backlogs on imports has severely limited the supply of new cars. That, in turn, has driven up the value of used cars to unheard-of levels. "I'm seeing two and three-year-old used cars with average miles bring in more than they were brand new on the window sticker," says KTRH Car Pro Jerry Reynolds. "I would have never in my life imagined I would see that."

The numbers are fairly staggering. The used car price index rose 9.2% in the past month, and 38% in the past year. But it does present an opportunity for some. "If you've got a trade-in, right now is the time to do something, there's no question about it," says Reynolds. "This is a temporary bubble, and it's going to burst, and it's going to burst soon...and when it bursts, prices are going to fall real hard, real fast."

In the meantime, Reynolds recommends looking for new cars, many of which will be available at a discount soon. "You've still got a whole lot of 2021 models already built, that are just waiting on ships," he says. "So there's going to be new 2021 models available deep into next year."

Otherwise, you're probably better off holding on to that beater and waiting for the market to calm down. "If you're looking to purchase a used car, and you don't have anything to trade that's of good value, it's probably the worst time ever," says Reynolds.

Photo: Getty Images North America

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