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Steady in Q2: Edmunds
Consumers seeking relief from new car prices in the used car market might be a bit dismayed by used car prices as well, according to the car shopping experts at Edmunds.
Edmunds data reveals the average transaction price (ATP) for used vehicles climbed to $25,410 in the second quarter of 2021 compared to $22,977 in Q1 and $20,942 in Q2 2020, marking the highest quarterly used ATP Edmunds has on record.
“Tighter inventory and fewer discounts in the new car market are pushing shoppers to seek a reprieve in the used market, and this consumer behavior is what’s also driving used car prices to astronomical levels,” said Jessica Caldwell, Edmunds’ executive director of insights. “Car shoppers are used to getting deals, and often far below the sticker price for new, so anyone returning to the car market for the first time in a while is in for some serious sticker shock.”
Although used car prices are expected to climb to new levels in Q2, Edmunds data reveals new car prices appear to be leveling off—the ATP for new vehicles hit $40,827 in Q2 2021, compared to $40,070 in Q1 and $38,895 in Q2 2020.
Edmunds experts note this is due to a shift in the mix of vehicles available in the new market: Edmunds data reveals the share of pickup trucks dropped to 17.1% in Q2 2021 compared to 22% in Q2
2020, while the share of SUVs and passenger cars increased. SUVs made up 54.6% of the market in Q2 2021 compared to 51.3% in Q2 2020, and passenger vehicles made up 23.8% of the market in Q2 2021 compared to 23% in Q2 2020.
“Pricey, optioned-out pickup trucks have been the darling of consumers and the primary culprit in boosting the industry average transaction price during the pandemic, but the well of inventory has finally run dry,” said Caldwell. “Consumers who can be more flexible are buying more passenger cars and SUVs, and although they’re paying inflated prices for these vehicles, comparatively they command much
less than their truck counterparts. Other shoppers are forced to sit out of the market until what they want comes back in stock.”
Edmunds analysts note the car shoppers who are still making purchases in the current market likely represent a more affluent portion of the population.
“This is not a buying environment for people on the fringe of being able to afford new car ownership,” said Caldwell. “Average loan terms are already quite long and interest rates are relatively low on average, so the consumer really has to make up the difference in price.”
Edmunds experts advise consumers who are considering making a purchase over the Fourth of July weekend or later this summer to make a concerted effort to shop around their trade-in, which can be done for free on sites such as Edmunds. According to Edmunds data, the average trade-in value for used vehicles climbed to $21,224 in June, marking a 75.6% increase compared to June 2020.
“In these unique market conditions, car shoppers must remember that they have the most negotiating power through their current vehicle,” said Ivan Drury, Edmunds’ senior manager of insights. “Although it’s important to do your research on available incentives, getting competitive quotes for your trade-in will be the smartest way to guarantee the biggest discount on your next vehicle.”
Source: Edmunds
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