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 GM, we see these trends play out in the prices in July and we wanted to highlight some of the top appreciating/depreciating vehicles.
Chevrolet Sonic +11%
The 2015-2016 Sonic models were averaging around $8300 at the beginning of the year and are now in the $10,000 range. In June alone they increased 11%. We are anticipating this trend continuing in July and prices increasing on average $600.
Chevrolet Express +8%
The GMC Express 2500 and 3500 were up an average of 8% in June respectively. These are business vehicles and we have seen this segment rebound due to both Covid reopening as well as parts shortages. Our models are showing that the 2018 models are doing the best in terms of appreciation.
Chevrolet Silverado Series +8%
The Silverado series were up between 6% - 8% in June. As with the Express, and what we have seen with other pickup truck models, work vehicles are in demand and increasing in value as solid vehicles to buy as new models are hard to find.
2021 models were actually for sale and did drop in value a normal -1% in the month. 2018, 2019 models were the ones that increased in value in June, specifically the 3500 series. Our models are showing an increase again in July, as the economy is rebounding and work trucks are in demand.
Chevrolet Spark +8%
The Chevy Spark, like the Sonic is a low-end economy work vehicle that people are buying. Especially with gas prices increasing drastically as the world economy rebounds, these fuel efficient, and cost efficient vehicles are in demand.
Least Appreciated Models
The least appreciated models in June were the following:
- Chevy Blazer +3%
- Buick Enclave +3%
- Cadillac CT6 +3%
We removed low selling models from our evaluation, such as the CT6 plug-in, ELR, and other models. This report gives an indication of how the post Covid-19 recovery is playing out in used work vehicles being in demand. It's a seller's market and if you own one of these cars, it could be worthwhile to upgrade to a newer model since this appreciation won't last forever. We anticipate it ending in Q3 and accelerating as the 2022 models come to market.
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.
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.