Looking to buy a used car? Get ready for some pandemic-fueled sticker shock.
The average price of a used car in Idaho is $26,662 — the fifth-highest price in the nation, according to iSeeCars.com, an online aggregator of used car listings. That’s 7.9% over the national average of $24,710.
The Idaho price corresponds closely to the average $26,980 sought by buyers seeking loans to pay for used cars from Boise-area dealers, according to LendingTree, an online company that connects buyers with lenders. Buyers asked for $5,560 more money — up 26% — in the second quarter of 2021 than in the second three months of 2020.
That was the sixth-highest jump in the nation, reflecting an increase in selling prices. LendingTree’s study looked at the purchase of 2-year-old cars.
Nationwide, the average loan amount requested jumped from $18,298 in the second quarter of 2020 to $23,474. LendingTree based its analysis on 600,000 loan requests it processed.
“The price of used cars is ridiculous at the moment,” Thom Brown, co-owner with his wife, Lisa Brown, of Flagship Motors in Nampa, said by phone.
A new-car shortage has increased demand for used cars, Brown said. Too few semiconductors are available to meet demand from car manufacturers.
Ford reported car and truck sales plummeted 33% in August. General Motors announced Sept. 2 that it would shut down six of its North American plants for two weeks this month and two others for a week each.
And late last month, a leading Japanese supplier, Rohm Co., said the shortage is likely to last through next year. The company, which supplies chips to Ford, Toyota and Honda, has been beset by a lack of raw materials. While it has increased production, the backlog is overwhelming, CEO Isao Matsumoto told Bloomberg.
The cost of a 2-year-old Toyota Camry sedan tracked by LendingTree increased from $12,783 in 2020 to $23,235. A sporty 2-year-old Dodge Challenger went from $20,998 to $25,722.
Used-car sales are close to what they were in 2019, before the coronavirus pandemic began, Ernie Garcia, CEO of Carvana, an online car sales company, told CNBC. He said he doesn’t expect prices to come down until new car sales rebound.
Not only are used-car buyers paying more for their purchases, they’re also looking at slightly older cars. The average age of a car by Boise buyers who sought financing through LendingTree in 2020 was 6.2 years. This year, it was nearly a year older, 7.1 years, LendingTree said.
The Treasure Valley has a long history of overpriced used cars, compared with other markets, Brown said.
“We’re not a city where we can get vehicles easily from other markets,” said Brown, who keeps 80 to 100 cars on his lot and typically sells them for $8,000 to $12,000 each. “If you lived in Las Vegas, you could pull from Salt Lake City, Fontana, Riverside and Anaheim, California, and Phoenix, so you have this amazing competition going on.”
Used cars available for purchase by dealers in the Portland and Seattle markets are priced even higher than in Boise, so they’re off-limits, Brown said. There’s nothing in Montana or Northern Nevada, and only a small number of cars in Northern California, he said.
“In Boise, there’s no real supply anywhere close by,” he said.
With the shortage of new cars, new-car dealers that typically might not keep any trade-ins with more than 60,000 miles for resale are keeping ones with 65,000 miles, he said.
“We’re all living through a perfect storm,” Brown said. “And I don’t think anybody is profiting from it. The big car dealers would be making more money if they were selling their normal new cars. They are paying a premium for used cars, because they’re competing with me, and normally I would buy the cars that they’re buying.”
Instead, they’re bidding against each other to find cars to fill their sales lots, he said.
“It’s a horrible situation for the consumer and for car dealers,” he said. “I don’t think anybody is coming out ahead.”
Alaska has the highest average used-car prices, $29,656, according to iSeeCars.com. That’s followed by Wyoming at $29,419, Montana at $27,303 and Arkansas at $27,123. Kentucky, Virginia, Connecticut, Ohio and Indiana had the lowest prices, under $23,000.