Peak pandemic was chaos, and it’s back to haunt us. According to a new report, the chip shortage that destabilized the automotive market and the car-buying public is rearing its ugly head again. That’s because the low volume of new cars available at the time has become a low volume of used cars today, which is driving prices back up.
Although manufacturing caught up in the post-pandemic years, leading to used car prices stabilizing and even decreasing, the lean years during which there weren’t enough semiconductor chips to go around have created an inventory of slim pickings for the gently-used car market.
Referencing sales data collected by Edmunds.com, the Detroit Free Press says that 3-year-old used cars are selling at a rate that closes the gap between new cars to just $17,000. For the first time in the post-Covid era, the average transaction price (ATP) of used vehicles circa 2022 and later is more than 30 grand.
In the first quarter of 2025, the ATP is $30,522, which is a 2.3% year-over-year increase. Additionally, used cars are sitting on lots for a longer period of time. Vehicles are hanging around for an average of 38 days, which is four days longer than the same time last year.
Even though dealer stocks are low, consumers simply aren’t willing to pay the price. However, waiting things out might be the wrong move. Tariffs are due to shrink new car inventory much in the same way the chip shortage did, leading to, you guessed it, a Groundhog Day of high prices, high demand, and no products. The Edmunds report notes that “spillover demand could once again inflate values of used vehicles, particularly for near-new models.”
“We’re repeating this cycle over and over,” said Edmunds Director of Insights Ivan Drury in an interview with the Free Press. “Not only has it just outright reduced volume, but leasing penetration rates took a dump. They were like the lowest we had seen in 10 years.”
Just as vehicle production dropped significantly in 2022 and 2023, leases were also down. Normally a steady source of additional used-car inventory, the number of vehicles coming off leases is not stellar. Trade-ins are also slightly older, up 0.3 to an average of 7.6 years in age.
American-made vehicles will not offer the cost savings some might be looking for, either. That’s because most of the vehicles assembled in the United States are already expensive to begin with, ergo SUVs and trucks.
The annual American-Made Index put together by Cars.com listed two sedans and a minivan in its latest 2024 top 10, while five SUVs and two trucks completed the list. So, American-made also means the highest average price. In this case, that figure is $53,000 versus the overall new car market average of $49,000.
If there’s a silver lining, it’s in the pockets of those offloading their cars. Lessees could see a higher payout, and those trading in a vehicle might be offered more value. But if you’re looking to buy, regardless of whether the vehicle is new or used, you’re kinda screwed.
When asked for a recommendation as to the best time to buy a vehicle, Drury told the Free Press: “I’d say that was yesterday.”
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