Strong new car demand has pushes new car prices up and supply down; spike in used car prices are exacerbated by the worsening used inventory
Centreville, Va.—Tax Day came amidst growing economic uncertainty motivating many car buyers to make that big purchase, which is a key driver behind the recent surge in sales and vehicle prices.
The latest CARFAX data found both car sales and prices are increasing well beyond typical seasonal patterns. This spring, the increase in used car prices is nearly two times compared to this time last year and the surge in sales is more than twice than last spring.
“We expect this surge in car prices and sales to continue,” said Srinidhi Melkote, Vice President of Business Analytics at CARFAX. “The strong new car demand has pushed new car prices up and supply down, leading some consumers to turn to used cars for a more affordable option. This shift in consumer behavior will drive up used car prices as well, creating a cascading effect across the market.”
In addition to car buyers ready to use their state and federal tax returns for a down payment, the recent spike in car prices is also exacerbated by the worsening used car shortage. According to CARFAX’s Used Car Index, the average cost of used Vans and Minivans climbed roughly $800 nationwide in March, with the most significant increases in the Midwest and Mid-Atlantic regions.
Nationally, used non-luxury SUV prices saw an average increase of $400, and used luxury SUV prices jumped $500. This marks a reversal from January, when used car prices for all vehicle types were in decline, hitting their lowest levels since the pandemic.
Last year, American consumers registered around 16 million new light vehicles and around 38 million used light vehicles. However, with the rate of new car production possibly dropping in the coming months, demand for used cars could rise, leading to even higher prices.
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