Used Car Sales Jump Amidst Tight Supply of New Cars

20 May 2021 Dashboard Insights Blog
Authors: Lauren M. Loew

As we previously wrote about on the blog, the availability of all forms of transportation has become more limited during the pandemic—cars, bikes, even scooters. The latest category to feel the squeeze is used car sales.

Anecdotal stories abound of consumers looking far and wide for used cars, and the difficulty in snaring some of the limited stock. Dealers are chasing down former customers to offer soaring trade in values for their used cars. The numbers back up this experience.

Major news organizations are documenting the sudden increases.  As Slate reported, the cost of used vehicles shot up 10 percent just in April, “the largest one-month increase in the category since the government began tracking the Consumer Price Index in 1953.” CNN described the prices as “soaring”, citing reports from Edmunds that “lightly used” vehicles are selling for 75-80+ percent of their original list, rather than the 60-70% typical for those vehicles.

The used car boom has also thinned inventory at used car dealerships.  One dealer quoted by the Los Angeles Times described his inventory as “decimated.” Seeing the half-empty lots around town—usually filled with used car deals—confirms the limited supply. This, in turn, increases the amounts that the dealers are paying to consumers for their vehicles. Car and Driver even advised buyers to look for deals over 100,000 miles—the vehicles that used to be the last pick for many consumers.

The reasons for this shortage are many—rental car companies replacing their depleted stocks after selling off vehicles last year, supply challenges impacting new car manufacturing, and economic uncertainty pushing many buyers towards used cars. Some even cite a decreased flow of repossessions as contributing to the issue.

It is unclear when this will end, but with manufacturers projecting continued supply constraints into the Fall, this trend is likely going to stick for the foreseeable future.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Related Services