Used car prices in the Philadelphia region jump by 27%. Here's what you need to know before buying
Bob Brinkman has been selling cars a long time. And he's never seen inventory in his Bucks County used-car dealership so low.
"It's very difficult to get used cars right now. We do get most of our cars from trade-ins," said the co-owner of First Class Auto Sales in Langhorne, which opened in 1996. " When new cars aren't selling because of the chip issue, the inventory of trade-ins stops. That's where we get most of our vehicles."
New car sales have been impacted by shortages of microchips for electronic parts as well as the shipping delays that are affecting many segments of the economy.
Joe Fialho, finance manager for O'Neil Buick-GMC in Warminster, said car dealers are having a hard time telling potential customers when the new vehicle they want to order would arrive.
"If you do find a new car, it will be more. It's very hard. There's a big shortage," he said.
"Some vehicle lines don't have production," he said, though O'Neil does have a stock of pickup trucks available.
Some dealers are allowing those leasing vehicles to extend their leases because they don't have other cars to replace them, Fialho said.
The auto market analysis and search engine firm iSeeCars reviewed the sales of 1.9 million used cars from one to five years old nationally and announced last week that their prices are up an average of 27.1% in the greater Philadelphia area.
The greatest increase in prices locally was for some normally less expensive vehicles because the demand for them has skyrocketed. For example, the price for a Kia Forte rose 49%, or by $6,340 this November compared to November 2020.
Other top price changes in the Philadelphia area included for the Toyota Avalon, up 47.4% or $10,217, and the Honda Odyssey, up 41.3% or $10,601 in the past year.
“Used car prices had drifted down, slightly, since they peaked in June, but they are back on the rise again, with the average used vehicle priced nearly over $7,000 above where it was last November,” said Karl Brauer, iSeeCars’ executive analyst. “With microchip shortage-related plant shutdowns persisting throughout the year, automakers have not kept pace with pent-up demand, and lingering supply constraints that are expected to continue well into 2022.
“Small cars have become the only affordable used car option for a growing segment of the population, and their price increases reflect the high demand these otherwise low-demand vehicles have experienced in recent months,” said Brauer.
New cars also are up in price, with some dealers even selling them for more than the manufacturer's suggested retail price (MSRP) but it's usually the used cars where the increase in prices is most noticeable, because dealers have more wiggle room to set what price they want.
"There's no two used cars the same," said ISeeCars spokeswoman Julie Blackley.
"If you’re in the market for a new car, you may have trouble finding available inventory. You can also expect to pay higher-than-average prices for vehicles that are in high demand. If you want to find the best deal possible, you should be willing to broaden your search radius, as the vehicle you want might be available at a dealership further away than you would typically look," Blackley said. "If the car you are interested in is priced well above its MSRP, you might also consider similar vehicles that may not have the same degree of price hike."
The new vehicle with the highest jump in price above the MSRP according to ISeeCars is the Jeep Wrangler, at 31.6% above MSRP, or $10,621 more. Other contenders include the Ford Mustang and Maverick, Chevrolet Corvette, Porche Macan and Cayenne, Lexus RX and Mercedes-Benz GLB. Most are popular sports and upscale vehicles that buyers are willing to pay more for.
One good thing about the current market is that if used cars are selling for much more than they did last year, they're also more highly valued as trade-ins.
If you have a trade-in, it will be worth 20-something (percent) more," Fialho said. When buying another vehicle, "that will offset some of the cost difference."
To contact Peg Quann, email mquann@couriertimes.com.
This article originally appeared on Bucks County Courier Times: Used car prices in the Philadelphia region jump by 27%
