By Emma Nitzsche
The adage that a new car loses half of its value as soon as it leaves the lot may not be true anymore. In the post-COVID market, consumers are keeping their cars longer, and dealerships are willing to pay high prices for used vehicles.
According to HIS Markit, the average age of vehicles in the U.S. hit a record 12.1 years, up from an average of 11.9 years in January.
The global semiconductor chip shortage and the increased durability of vehicles contributed to the increased age of cars on the road. But with fewer vehicles available, new and used car prices are skyrocketing.
According to the Manheim Used Vehicle Value Index, the average used vehicle price in May was $20,426, up 4.9% from April and up 46.7% from a year earlier.
At the same time, the number of new vehicles available for sale at dealerships fell 36% in March, whereas the total used-car sales rose 117%.
Current car shortages mean trade-in values for older vehicles are also spiking. Trade-ins averaged $17,080 last month, up nearly 21% from the same period a year ago.
“Consumers who own a vehicle and are thinking of making a new car purchase in the near future should consider pulling the trigger now,” said Ivan Drury, Edmunds’ senior manager of insights. “The inventory situation isn’t going to get any better any time soon, and you could essentially be wiping away multiple car payments with the added value of your trade-in.”
For example, the 2018 Toyota Tacoma has retained an average of 79 percent of its value, with a trade-in estimate of $28,523. In addition, the Toyota Tundra, Toyota 4Runner, Jeep Wrangler JK, Nissan Frontier, Chevrolet Colorado, and Honda Ridgeline have also retained at least 70% of their value.
Additionally, current vehicle owners are more aware of the importance of preventive maintenance and scheduled servicing to maximize the lifetime value of their vehicles. Despite fewer people driving during the pandemic, consumers have kept up with their car’s maintenance. The rising demand for aftermarket parts and technician services is spurring new growth, and revenue opportunities have fostered a wide range of business for the automotive industry.
