The used car market is not showing signs of slowing down – but not all cars are appreciating at the same rate.
The used car market in the United States continued its unprecedented comeback. The reason for the increase in prices in 2021 have been two main factors:
- The chip shortage has cut production of new cars by 3.9m cars globally according to AlixPartners.
- Increased demand from post Covid recovery as lockdowns end and people start to travel again.
Our models show the pricing tailwinds lasting into the middle of Q3 as of now, and AlixPartners is forecasting a chip recovery in Q4. What does this mean to you as a potential dealer/car owner/car buyer? July prices increased on average by 6%! Historically, these vehicles should drop about 1%-1.5% each month.
This is leading to used car dealerships having record earnings and car owners selling upgrading into new cars by selling their used cars for great prices. Yes, some used cars are going for more than new cars. This is partially due to credit history and the ability to get car loans by different segments of the market in the United States.
With respect to Ford, we see these trends play out in the prices in July and we wanted to highlight some of the top appreciating/depreciating vehicles.
Used Ford Transit Series Increased 7%
These vehicles are used by businesses to travel goods, equipment, and in July they increased in value by an average of 7%. The top appreciating model was the 2021 Transit-350, which increased 10% in July from June. The Kansas City plant which makes the F-150 also makes the Transit and both were affected by the chip shortage and were shut down for some time.
- Used 2021 Ford Transit 350 +10%
- Used 2021 Ford Transit 150 +8%
- Used 2021 Ford Transit 250 +7%
Used Ford Ranger Increased 7%
The Ford Ranger is a smaller pickup truck with respect to the top selling F-150 series, but it has increased on average 7% in July. The 2019 model appreciated 8.3% primarily due to high demand and a low supply of trucks. In addition, the Wayne Assembly Plant where the Ranger is built also suffered from a chip shutdown for two weeks.
- Used 2021 Ford Ranger +7% monthly increase
- Used 2020 Ford Ranger +6% monthly increase
- Used 2019 Ford Ranger +8% monthly increase
Used Ford F-Series Increased 6%
The Ford F-Series is the most in demand vehicle in the United States and with the economic rebound, new model in 2021, and the chip shortage, we would have expected these trucks to be the most appreciating products for Ford. They increased in value an average of 6.2% monthly increase. As mentioned earlier, the chip shortage has affected the production of these trucks in 2021, and many dealerships don’t even have any inventory, pushing up used truck prices.
- Used F-450 +6.7% and top appreciating years are 2015,2016
- Used F-350 +6.2% and top appreciating years are 2015,2016
- Used F-250 +6.1% and top appreciating years are 2016
- Used F-150 +5.7% and top appreciating years are 2017
Used Ford EcoSport +6%
Up until now, the vehicles that appreciated the most were primarily used for business purposes. The Ford EcoSport is the first consumer vehicle which increased 6% in July.
You can sell these cars for the high teens to low 20k range. In a normal environment these would be selling for low teens. What a time to be a EcoSport owner!
Used Ford Fusion +6%
The Ford Fusion was up 6% as well in July like the EcoSport. Generally, this is a consumer vehicle, not necessarily used for business users. The older models which had depreciated more are the ones that are increasing in value more than the newer models.
Least Appreciating Vehicles of July
No Ford depreciated in our model in July. The three least appreciating models were the Expedition, Expedition Max, and Mustang. Interestingly, the Expedition had a production shutdown as well, and is relatively old model with its last update in 2017.
- Ford Expedition Max +2.2%
- Ford Mustang +3.3%
- Ford Expedition +4%
The way we evaluate used car prices is to see what the market needs are both at the macro level as well as seeing what trends are at different dealerships and private party sales. We look at retail sales price of vehicles, so when selling to a dealer, your price may vary 10%-15% from these prices.
Moreover, our models may not reflect market rates for low volume sales of models. For example, the Ford Shelby is not a high volume seller since it’s a niche product, so we do not include its fluctuations in our analysis.
We also look at macro trends, actual customer driving history for connected cars, engine/battery condition via various methods, and other proprietary algorithms. Our analysis has been quite accurate even in the current environment, and it is showing continued tailwinds for valuations of used cars for the foreseeable future.
Keemut is an automotive technology startup that is using connected car technology to value used cars dynamically. By educating car owners on the condition of vehicles during their ownership period, they can reduce their vehicle's depreciation. This in turn helps car owners get a better price for their car and Keemut provides the tools to car owners to monetize on their vehicle data while doing so.
If you would like to learn more about Keemut, please sign up at keemut.com.