Used-car prices are up 23% from a year ago, and SUVs and trucks are up 17%. Demand shot up because so many consumers have switched from public transportation, ride-sharing, trains and planes to personal vehicles to avoid exposure to the COVID-19 virus. Government stimulus checks and the inability to spend much money on things like dining out have also goosed vehicle spending. Prices of used cars have climbed by larger percentages than prices of trucks and SUVs because cars tend to be cheaper—which makes them more attractive to low-income workers, who have suffered the most economically during the pandemic. Also, inventories of used cars were very low to begin with, because most new-vehicle buyers are choosing pickups and SUVs.
The strong demand will likely last until a viable vaccine gets widely distributed and the public’s health fears subside. When that happens, used prices may slide again. And it appears that prices may have already peaked; weekly transaction data show them edging down slightly since mid August. But for now, they’ll remain elevated. So if you’re thinking about buying a new ride and trading in your current car, you should still have some room to negotiate a higher price on your trade-in.
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