Prices for both new and used vehicles have soared over the past year and a half. In fact, these prices, which are included in the items that make up the consumer price index (CPI), have gone up much faster than overall inflation. Several used car models had year-over-year price increases of over 30% in July.
The jump in used car prices has been driven largely by the price of new car prices. New car inventory has been undermined by supply chain issues. Car companies have not been able to reach annual unit sales anywhere near what they were before the COVID-19 pandemic. As people try to avoid paying unprecedented amounts for new cars, they have turned to used ones. In turn, used vehicle prices have surged as well. Used car prices also have run well above the monthly CPI.
The title of the latest iSeeCars monthly report is Used Car Prices Rise in July, Demand Remains High for Fuel-Efficient Vehicles. It indicates that the price of cars that are one to five years old rose 10.9% in July, compared to July of last year. This brings that average to $34,291. Although the number is high, the pace of the increase has dropped from the pace in recent months.
iSeeCars Executive Analyst Karl Brauer confirmed the slowing of price increases: “Used car prices remained steady in July compared to June, and both months marked the first time in 2022 that saw a decrease in price for some used car models.”
The pattern of increases showed that the largest jumps are among cars that get good gas mileage, which include electric vehicles (EVs). This may be due to the fact that the price of an average gallon of regular gasoline topped $5 for the first time three months ago. Although the price has dropped to $4, that remains historically high.
The model with the sharpest increase in July is the Nissan Leaf, the Japanese car company’s small EV. Its price rose 43.8% from July of last year. That translated into an increase of $8,563 to an average of $28,093.
The Leaf gets poor marks from many car research surveys and car media analyses. Car and Driver gives it a score of only 6.5 out of 10. Nevertheless, the Leaf gets the equivalent of 121 miles per gallon.
For people who want to buy high-mileage cars, the Leaf is an example of their recent financial burden. The only winners are people who bought these cars a few years ago and can sell them for a large premium now.
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