The American car industry has been battered by a shortage of microchips and other parts used in vehicle manufacturing. Semiconductors, in particular, are critical to car electronics and navigation systems. While supply is short, consumer demand has reached normal levels, after an interruption brought on by the COVID-19 recession.
As a result of new car shortages, prices of some used cars have soared, and the most overvalued used car in America is Hyundai Sonata Hybrid.
The industry shortage has become a mixed blessing for auto makers and dealers, much less so for consumers. Manufacturers have to give fewer incentives to sell very tight inventory. Profit per car has risen, but overall revenue has been undermined by vehicle shortages. Car dealers can get consumers to pay top dollar, but their lots are often close to empty.
The imbalance between supply and demand has increased car prices by double-digit percentages year over year, so far in 2022. Cars are among the fastest rising in price among the components in the consumer price index. This has likely caused people to hold their current cars longer, but they eventually will need to replace those cars with new ones or used ones with only modest mileage totals. (This is the longest lasting car on the road.)
The pace at which the prices of used cars in particular have risen is extraordinary. According to iSeeCars, they increased 30.4% in March, compared with the same month a year ago. That translates to a dollar increase of $8,032 between the two periods. iSeeCars examined 1.8 million used car transactions in March for vehicles 1- to 5-years-old to determine which models had the greatest increase compared to March 2021. (Some used cars even cost more than new cars. Here are 15 cars that cost more used than new.)
To determine the most overpriced used car in America, 24/7 Wall St. reviewed iSeeCars’ report Used Car Prices Fall in March, Demand Remains High for Affordable and Fuel-Efficient Vehicles. Cars were ranked by the percentage increase in price from March 2021 to March 2022. Cars on the list rose in price by 42% or more in the past year.
iSeeCars executive analyst Karl Brauer said, “After coming down for the second consecutive month, used car prices remain elevated due to lingering supply constraints, and could rise again due to geopolitical factors as Russia is a key supplier of materials used to make car parts and microchips.” Put another way, used car prices could get worse from the standpoint of the consumer.
The car model with the largest price increase in the period was the Hyundai Sonata Hybrid, which rose 63.9% to $25,620. This midsize sedan generally gets good grades from car research firms and media. U.S. News rates it 8.8 out of 10, while Edmunds rates it 8.1 out of 10. and Kelley Blue Book rates it 4.1 out of 5.
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