If you have a used vehicle in the driveway, you may be sitting on a pile of cash and not even know it. Influenced by the global chip shortage and ongoing effects of the COVID-19 pandemic, there's an increase demand for used vehicles amid a shortage of new ones to buy.
The Edmunds has noted high-mileage older vehicles, and used cars in general, are selling faster and for more money than ever. The same is true for used cars in general, as for Mercedes Lilienthal family found out recently. In September 2017, they bought an entry-level 2017 Mitsubishi Mirage ES hatchback new for $9600, a significant discount from the MSRP, which was in the $13,000 range. Nearly four years later, with 18,266 miles on it, they sold the car to CarMax for $9400 – just $200 under its original purchase price. The car was later listed at $12,998, essentially the same as MSRP.
Edmunds' data shows this was no fluke. Its analysts said the average transaction price for older, high-mileage vehicles sold at dealerships was up 31% year over year for vehicles with odometers reading from 100,000 to 109,999 miles. Where the average was $12,626 in June 2020, last month it climbed to $16,489. This set of vehicles also sold in an average of 30.5 days in June 2021 compared with 37.7 days in June 2020.
The Edmunds list of top 100,000-mile-plus sellers was led by the Chevrolet Silverado 1500, up 49% year over year with an average transaction price of $26,914, followed by the Ford F-150 at an average price of $25,924, up 43%, and the Dodge Ram 1500, up 42% with an average transaction price of $24,657.
Filling out the top 10 were the Ford Escape; Honda Accord, Civic, and CR-V; Jeep Grand Cherokee and Wrangler; and the Toyota Camry. All of the top 10 were at least 6.5 years old and some were more than eight years old.
Neal Coppola, general sales manager at Oregon dealership Tonkin Gresham Honda, has been in the auto industry since 2001 and told Car and Driver: “We’re adjusting inventory to people's needs. A five-year-old SUV that used to be $20,000 is now $28,000… [but] you need to backfill and still have that $20,000 car." He adds with values escalating, the only way to do that is to offer older and/or higher-mileage vehicles.
Coppola said the company is now forced to pay "scary dollar amounts" for auction or trade-in autos. "We watched full-size SUVs from General Motors like the GMC Yukon or the Chevy Suburban, in the months of May and June, go up $3,000 to $4,000 – on a weekly basis."
Although he noted prices have somewhat plateaued since then, costs are still hard to predict. "We adjust our pricing on a weekly basis according to market supply." Consequently, customers who wait a week to purchase a vehicle may come back to see the price increase by $1,200 or more, depending on market demand.
Coppola expects to keep focusing on high-mileage vehicles until "the market tells us we don't need to." As 2022 models start trickling in, he anticipates being "completely out of new cars by the end of this month."
Edmunds' Ivan Drury noted, "Consumers with an old truck sitting in their driveway are in the best position to take advantage of this wild market." And while used trucks and popular vehicle models are flying off dealer lots, all sorts of autos are getting a new lease on life. The moral of the story may be, you don't have to own a highly desirable or nearly new vehicle to sell it for more than you ever expected.
Source: Car and Driver