According to car-shopping site iSeeCars, there are currently 16 models that will cost you more used than new.
That is, how shall we say, unusual. And, obviously, not good news for the used-car shopper.
It’s all part of a broader trend — in June, according to iSeeCars, the average lightly used car cost 3.1 percent less than the price of its equivalent new car. In November 2020, the difference was 10.8 percent.
“Used car prices have risen overall, and prices have dramatically increased for certain in-demand models that may be harder to find on new car lots,” iSeeCars executive analyst Karl Brauer is quoted as saying in the article. “Dealers may think used car buyers are willing to pay more for the instant gratification of a lightly-used vehicle they can drive right off the lot rather than waiting for a new one.”
Unsurprisingly, the chip shortage that has led to tight new-car supply appears to be at least partly to blame.
The list of the 16 vehicles is led by the Kia Telluride, which can command an average of 8.1 percent over new, at around $47K. The average new price on Telluride is about $44K.
The other vehicles on the list include the GMC Sierra, Toyota Tacoma, Mercedes-Benz G-Class, Toyota RAV4 Hybrid, Toyota Tundra, Dodge Challenger, Toyota 4Runner, Hyundai Palisade, Tesla Model 3, Honda Civic, Dodge Charger, Honda Odyssey, Kia Rio, Subaru Crosstrek, and Subaru WRX.
All but the G-Class are considered “mainstream” models, and while some of those vehicles can get pricey, only the G and the Sierra are truly considered luxury models. We’ll also note the Civic is about to change over to the 2022 model year, so it’s possible that Civics from the outgoing generation are in short supply regardless of the chip situation.
We should also note that the Telluride has been a hot seller since launch and given that the launch was in 2019, there likely aren’t that many used ones around. Brauer further notes that the RAV4 Hybrid might be popular due to high gas prices and that the Tesla makes the list likely as a way for Tesla buyers to avoid waiting weeks for a new car.
Most of the models on the list are relatively popular, too. The exceptions would be the G-Class (a luxury toy for the Beverly Hills set), the Tundra (oft-ignored in favor of the competition), the aging 4Runner, the sometimes forgotten Rio, and the long-in-the-tooth WRX.
This makes obvious sense — if the new-car supply of desirable models is tight, buyers will seek out lightly used models, and that desirability will lead to increased prices.
However, it also flips conventional wisdom on its head. Until recently, buying a well-maintained used car was often seen as a way to get an almost-new vehicle at a lower price without taking the depreciation hit.
Now, though, the combination of popularity and restricted new-car supply has sent the market haywire, at least temporarily. Forecasters do see a return to normalcy once the chip shortage is sorted out. Once models like the Telluride and Palisade are available new from the factory in large numbers, those who’d rather not settle on a used vehicle will go back to buying new. That will make lightly-used cars less desirable, and bring prices down.
Insanity, thankfully, can be temporary.