By Isaiah Steinberg, Las Vegas Review-Journal
Pete Kelly, the used car manager at Jim Marsh Kia and Jim Marsh Chrysler Jeep in Las Vegas, hasn’t bought a used car for less than $20,000 at auction in over two years, and it’s not for lack of trying.
Since the pandemic, he said, there are fewer options for used cars under $20,000 and he’s having to compete with national chains willing to accept slimmer profit margins.
Nationwide, demand for vehicles has dwindled due to high prices and interest rates in recent months, following a brief tariff-induced panic in March.
Despite the temporary dip in demand, the average price of 3-year-old used cars in the U.S. has increased 40.9 percent since 2019, according to an iSeeCars study.
That’s largely due to the pandemic, said Nicholas Irwin, an associate economics professor at UNLV.
“You had a lot of used cars that were being sold to a lot of buyers thanks to rental companies selling off some of their stock to survive, and also just generally more interest in replacing cars during that period,” Irwin said.
After the pandemic, Irwin said, inflation worsened the situation for new car buyers, increasing prices further.
The average new car in the U.S. costs about $48,000 and the average 3-year used car costs about $31,000, according to recent Edmunds data. That’s an increase from about $21,000 for the average 3-year-old car in 2019.
President Donald Trump’s 25 percent tariff on imported cars and auto parts prompted many Americans to worry they could not afford a new car, spiking demand for used cars, Irwin added.
“As inflation continues to rise, I don’t think the percentage of cars under $20,000 will go up,” Chris Hemmersmeier, president and CEO of Jerry Seiner dealerships, said. “I think the new standard will continue to rise, so maybe it rises to $23,000 or $25,000 in the next few years.”
In the short-term, consumers should jump on used car deals while they still can, Hemmersmeier and Kelly said.
“Outside of my office right now is a 2018 Volkswagen Passat that I’m asking $15,000 for,” Kelly said. “That car probably won’t be here Friday.”
A variety of factors, from COVID-era supply shortages to inflation to tariffs to high interest rates, has caused a significant increase in used car prices across the country.
Irwin said the increase will cause the stock and quality of the remaining sub-$20,000 used cars to decrease.
“This is just another cost that is just putting pressure and creating a burden for our working-class families,” Irwin said.
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