The average price of a used car in November is $29,012, which is a new record and is due to the shortage of second-hand cars and the slow new vehicle production.
A used car in the United States costs 39 percent more than it did a year ago, and according to some estimates, this is the first time half the households in the country are in a situation where they wouldn't be able to afford a car. Many would-be buyers have been priced out of the market because of the rapid price increases.
When five years ago an individual could claim a new vehicle with a monthly payment of $500+, the same amount is required for a used car. The 39-year-high inflation has made it almost impossible for the average American to afford a car.
A woman paid a visit to the used car lot in Omaha, Nebraska, a couple of months ago. She said she was on a tight budget and needed a vehicle to commute to work.
She was shown three cars that were close to her limit. The woman was shocked.
He recalled that she said she got for $7,500. She had expected the vehicles to be less old than the one that had been totaled in the crash.
The woman settled on a Toyota scrull that had 160,000 miles on it. He isn't sure if he made a profit on the deal. He said they helped her out.
There is only about 1 million new vehicles available in the country. The number before the Pandemic was around 3 million. Prices are expected to remain high unless supply increases to somewhere close to the pre-pandemic mark.
Used cars will follow in the footsteps of new vehicles and prices will go down as buyers trade their vehicles for newer models.
People stayed back home, traveled less and relied more on their computers and mobile devices as the economy was hit by the Pandemic. Due to less demand, auto manufacturers stopped production and cooperated with government shutdowns.
The focus of the chip manufacturers was consumer electronics. Although the easing of restrictions and economic recovery caused auto factories to restart, they were unable to procure enough chips, leading to a shortage in supply and high prices.
The shortage of used cars and the inability of bulk buyers of new vehicles to replace their inventories resulted in higher prices and fewer vehicles.
The average price of a used car has increased by nine percentage points since the beginning of the year.
"I've never seen anything like this before, it's craziness," said Schrier, who has been selling cars for 35 years. It is quite frustrating for so many people.
At this point, Schrier has to tell lower-income buyers that he has very few used vehicles to sell. He said that the car used to be $5,000. $8,000 used to be $11,000 or $12,000.
Jim Bianco says that the value of a used car is increasing more quickly than stock assets.
Bianco told CNBC that if you wanted to know what the best investment was in 2021, it was the car sitting in your driveway or garage. The stock market has appreciated more recently than some cryptocurrencies.
The Associated Press contributed to the report.
By Naveen Athrappully
Athrappully is a news reporter at The Epoch Times.
