Due to a global shortage of chips, used vehicle prices have been soaring, leading to a decrease in availability among new vehicles and an increase in the trade-in values for older or used vehicles.
According to the popular car research website, Edmunds, the average value of used vehicles traded in reached a record high number in March. Trade-ins averaged about $17,080 for the month, increasing about 21% from the same period one year earlier.
The global chip shortage has primarily caused this, as it has obstructed the auto industry’s ability to produce and manufacture new vehicles. As a result, this has motivated individuals to shop for used vehicles, causing prices to soar. The global chip shortage occurred due to the COVID-19 pandemic’s disruption on the supply chain. In turn, this has caused a disruption in new vehicle production, but it has also caused car-shopper demand to surge.
Additionally, the market for certified pre-owned vehicles is highly advantageous to car-sellers currently. According to Cox Automotive, used vehicle sales increased about 36% from February to March, allowing for total used vehicle sales to increase about 117% from March 2020. On the other hand, the amount of new vehicles available for sale has decreased 36% since March 2020, and new vehicle inventory has decreased more than 15% since the global chip shortage occurred.
Clearly, now is a great time for consumers to sell their used vehicles, as well as to make new car purchases. Ivan Drury, Edmunds’ senior manager of insights, stated that the “inventory situation is not going to get any better any time soon, and consumers could essentially be wiping away multiple car payments with the added value of their trade-in.”