People may need to save up extra cash to purchase a used vehicle.
Last year's price hikes have yet to slow down. It's good news for people looking to sell their vehicles.
Pat Ormond never thought of his 2019 Chrysler minivan as a collector car. But he just got an offer to trade it in for $7,000 more than what than he bought it for.
"We paid $33,000 for it," a stunned Ormond said. "And we recently got an offer from CarMax to take it in for $40,200."
If he sells it, he would make a $7,000 profit.
Ormond says people can forget the old adage that a new car "should typically depreciate 20 to 30% the day you drive it off the lot."
Average used car prices now a record
Kelly Blue Book says used car prices rose over 25% in 2021 as a result of the new car shortage. The average used vehicle is now worth a record $29,000, up from $27,000 over the summer.
How much longer will the trend last?
Auto dealers say it is going to take manufacturers to finally churn out enough new cars to calm the used car market.
Gary Heflin, who owns Courtesy Automotive, an independent dealership, says the computer chip shortage is finally easing, which should mean better supplies of new cars and trucks by this summer.
"Manufacturers now are starting to build up some inventory, which will help a little bit," he said.
In addition, without stimulus checks in 2022, demand should be lighter than last year, as buyers rushed car lots with government cash.
But he worries buyers could face an even tighter market this spring before things improve.
"Springtime is usually the biggest market there is for used cars, with tax returns, tax money, and people coming out of winter," Heflin said, which could mean shortages again by April.
All this means Pat Ormond could profit handsomely trading in his minivan, but that doesn't really help him if he wants to replace it with something else.
"While it is great to sell in this market," Ormond said, "I don't think I can buy in this market, unfortunately."
The bottom line is that trying to replace your old car could cost a lot more than you think, and could be a case of don't waste your money.
Don't Waste Your Money" is a registered trademark of Scripps Media, Inc. ("Scripps").
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