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John Welsh
John Welsh Mod Squad
1/27/21 12:33 p.m.

I have been saying Post-Covid that what used to be a $3k used car is now a $5k used car.  I have no firm proof of this but it is my general feeling.  It should be noted that when I make that statement, I am talking about just plain ole regular used cars.  The kind of car that you might buy for your high school kid to drive to school.  

 

Well, today I came across some interesting data to share.  
I was on IAA searching what will be auctioned off this week locally.  I came across a silver Pontiac Vibe.  It looks just like the other two Pontiac Vibes I have bought at salvage auction in the past couple of years.  The data that I will be focusing on is the value assigned to each car in its pre-accident condition.  On the IAA site this is listed as ACV or Actual Cash Value.  

#1 is this Vibe being currently auctioned off with pictures taken 1-14-21
2005 Vibe w/ 45k miles
ACV: $5,832 around 1-14-21

This second screen shot, near the bottom right shows Actual Cash Value (ACV)

 

Next are screen shots of the two cars I bought in the past:  

2003 Vibe awd w/ 67k miles bought Jun '19
ACV: $4,728

2005 Vibe w/ 97k miles bought Dec '18
ACV: $4,541

 

I know this is not an exact science but two of these cars were insured and then valued by State Farm and one by Progressive.  I'll bet they are very good at what they do in assigning these values.   

So, some things I notice:  

Jan '21  '05 w/ 45k = $5,832

Jun '19  '03 w/ 67k = $4,728
1.5 years has past since these two cars sold.  The '03 is a 2 year older car than the '05 making the cars now generally the same age old in the marketplace or the '05 is half a year newer.
$5,832 - $4,728 = the '05 will now value for $1,100 more than the same value 2 years ago.  That is nearly a 25% increase in valuation.  
Yes, the current valuation is for 22k less miles but that alone is not 25%.  The '03 was also higher equipped w/ the awd option.  I'll call that a wash and show the 25% increase for a very same car.  

 

Dec '18  '06 w/ 97k = $4,541
Exactly 2 years has past since these two cars sold and the higher priced car is a year older so the cars are 3 years different in the marketplace.  
$5,832 - $4,541 = the '05 will now value for $1,291 more and that is for a car that is 3 years older in the marketplace.  This $1,291 is nearly 29% higher valuation.
Yes, that 29% higher is for a car w/ 52k miles less (97k vs 45k) but that alone does not make up the 29%.  Besides the lesser valued car had more options including alloys, sunroof and better radio.   

So, informally, these values are up 25% and 29% for what I think you can see are very average cars of very similar quality.  

(Ignore the accident damage.  This ACV is a determination of pre accident value by the insurance company. ERC or estimated repair cost is a valuation of damage repair costs)

 

My initial premise was that what was $3k is now $5k (or what would be a 66% increase.)  This data shows that from an insurance company valuation stand point, there is a 25% to 30% increase.  Maybe not 66% but nearly half way there!  

 

 

WillG80
WillG80 Reader
1/27/21 12:52 p.m.

I've posted this elsewhere on the forum before. Manheim is a giant auction house similar to IAAI. They publish the used car price index monthly based on the selling price of cars at their auctions. Their data shows a very similar increase, about 20%-25% since the beginning of COVID-19. Interestingly, no sign of a decrease in the 6 months since the spike. 
 

Placemotorsports
Placemotorsports HalfDork
1/27/21 1:32 p.m.

Makes me want to consider selling my old truck

Antihero (Forum Supporter)
Antihero (Forum Supporter) UltraDork
1/27/21 1:37 p.m.

In reply to Placemotorsports :

Trucks have gone up a lot here

L5wolvesf
L5wolvesf HalfDork
1/27/21 2:14 p.m.
Antihero (Forum Supporter) said:

In reply to Placemotorsports :

Trucks have gone up a lot here

But here (AZ) not so much.

classicJackets (FS)
classicJackets (FS) Dork
1/27/21 2:22 p.m.
WillG80 said:

[Removed.]
 

Interestingly, no sign of a decrease in the 6 months since the spike. 

New car prices are at an all time high (on average transaction price), and many automakers have had (and many still having) difficulty with production through this year.. So some people who wanted new cars would have had a harder time finding them on a dealer's lot. So, easier to turn to used vehicles and spend similar money (but still less than a new car).

Nitroracer (Forum Supporter)
Nitroracer (Forum Supporter) UltraDork
1/27/21 7:25 p.m.

In the last two months I have seen the bottom of the market offering some cheap, sub $2021 cars that look like they could be used or saved again.  A year ago the bottom of the market dried up and disappeared.  But this is more of an outlier than the norm, prices are definitely up.

CatDaddy
CatDaddy New Reader
1/27/21 8:04 p.m.

What is driving the increases? Is it the bolstered unemployment benefits that were being abused?

the stimulus checks alone wouldn't necessarily account for increased buying power unless the parents were leveraging their kids as well. Very interesting

Antihero (Forum Supporter)
Antihero (Forum Supporter) UltraDork
1/27/21 8:11 p.m.

In reply to CatDaddy :

People are desperate to get money and want as much as they can get for their stuff

Pete. (l33t FS)
Pete. (l33t FS) MegaDork
1/27/21 8:13 p.m.

In reply to CatDaddy :

People are still needing cars, new cars are not as available, so used is the next place to look.

People who want to buy a new car are going to be looking at nearly-new cars.  The people who used to be looking at nearly-new are priced out of that market, so they are looking at 2-3 year old cars... And so on down the chain.

 

The numbers are probably difficult to get and correlate, BUT I wonder what happened to used car prices in the 40s when wartime production meant that ALL new car production ceased.  It's a little difficult to correlate because cars did not last nearly as long then as they do today, which would have made this effect even stronger, I'd think.

GTwannaB
GTwannaB HalfDork
1/27/21 8:26 p.m.

People want to get out but don't want Uber, can't get on a plane and don't want.to get on public transportation. The next option is buy a car. 

tr8todd
tr8todd SuperDork
1/28/21 4:51 a.m.

My buddy owns a gas station/repair station/used car lot.  He stopped buying cars at auction because it was remote bidding only, and the prices were too high.  He had a big sign and was trying to buy directly from customers, and also chasing down leads he would get about facebook cars.  About a month ago he finally caved and gave in to the new normal.  Last summer I sold a Focus SE for $3500.  He got in a nearly identical car this week and listed it for $4800.  It was gone in a day.  There are still deals out there, but you have to be open to what you find.  This past year, I picked up a 85,000 mile v6 Saturn Vue with a rusty rear subframe for $1200, and 09 Mini Cooper with ABS lights for $2000, and a near mint 12 Mini Cooper in ultra rare ice blue with 89K miles for $3600.  Wife and kids get cheap nice rides, but they don't always get a say in what I give them.

DeadSkunk  (Warren)
DeadSkunk (Warren) PowerDork
1/28/21 9:26 a.m.

Given that the price of ratty Miatas seems to be climbing weekly, I've been inclined to put the  $1800 Challenge Miata on the market and ask some stupid amount for it. If a normally aspirated version is asking $4-5K, then my supercharged one should be $5-6K. I'd pocket the money and wait to see if prices drop at some point and then go buy a newer, nicer one.

John Welsh
John Welsh Mod Squad
1/28/21 9:37 a.m.

In reply to DeadSkunk (Warren) :

For a Miata sale, I might recommend waiting until one of the first great weather weekends to get maximum.  

trigun7469
trigun7469 SuperDork
1/28/21 10:03 a.m.

You can atleast count on the run of the mill racecars are still cheaper to buy that build lolz. Interest rates low on loans + stimulus checks+ tax refund on the horizon + maybe Stimulus 3, One would think it's going to be a sellers market this summer. If you have a truck you are probably going to double your money.

SVreX (Forum Supporter)
SVreX (Forum Supporter) MegaDork
1/28/21 10:55 a.m.

In reply to DeadSkunk (Warren) :

If you decide to sell, let me know. 

calteg
calteg Dork
1/28/21 3:34 p.m.

This is what I do for a living, yes prices are way, way up. Tax season is just around the corner, don't expect used car prices to come down before Summer

Peabody
Peabody UltimaDork
1/28/21 3:50 p.m.
GTwannaB said:

People want to get out but don't want Uber, can't get on a plane and don't want.to get on public transportation. The next option is buy a car. 

Then why are used motocross bike prices going crazy?

There's no shortage of new ones. Dealers still have stock, and in some cases still have bikes from 2019. And nobody needs a motocross bike, especially since most of the sries are cancelled

DWNSHFT
DWNSHFT Dork
2/3/21 11:24 a.m.

Evidently there is a shortage of chips to make new cars.  Will this help prop up used car prices?

 

There's a global microchip shortage that's straining supply chains across the automotive industry. According to Automotive News, it has already impacted Nissan, Fiat Chrysler/Stellantis, Volkswagen, Ford, Subaru, Toyota, and others. Combined with the challenges it poses to other American companies in the electronics and complex goods industries, the chip shortage threatens the country's post-pandemic recovery, according to a letter sent to the White House by a group of senators and reported by Reuters/Automotive News. The letter was signed by 15 senators, including auto caucus chairs Rob Portman (R-OH) and Sherrod Brown (D-OH) along with Senate Majority Leader Chuck Schumer.

 

[Sorry to post a link from that other magazine... https://www.roadandtrack.com/news/a35405893/analyst-thinks-the-apple-car-will-do-0-60-in-35-seconds/?source=nl&utm_source=nl_rdt&utm_medium=email&date=020321&utm_campaign=nl22832045&utm_term=AAA%20--%20High%20Minus%20Dormant%20and%2090%20Day%20Non%20Openers]

 
 
 
 
 
trigun7469
trigun7469 SuperDork
2/4/21 10:41 a.m.

I have a saved search for Mini Coopers, what used to be $1500 project cars are now $3-4k. There was a 2009 with front end damage and blown engine for $5k.

Curtis73 (Forum Supporter)
Curtis73 (Forum Supporter) MegaDork
2/4/21 4:27 p.m.

Just don't start researching boats and RVs.  Not 20-30%, not 66%.... try about 125%.  And they only last about 20 minutes on CL or FBM

DWNSHFT
DWNSHFT Dork
5/10/21 10:33 a.m.
Snrub
Snrub Dork
5/10/21 11:33 a.m.

Interesting!

It's a really an unusual situation, we probably don't have a historical precedent. Supply is down, but demand only dropped for a short period and bounced back. People in say the top half of household came through completely unaffected. Savings are up, particularly for people towards the bottom rungs of household income. People in the bottom income groups experienced a greater disruption to income and were more threatened by changes in consumer behavior/covid restrictions.

With the financial crisis, people didn't buy new for a while and become more interested in less expensive vehicles (eg. temporary re-emergence of subcompacts), which caused production to drop and pushed up future used vehicle prices. This situation doesn't follow a typical recssionary model.

The wartime example Pete suggested might have some similarities in that the economy didn't drop, but the output of the economy was dramatically redirected. Like this scenario, consumers redirected their spending towards things which made sense in the circumstances. However, the redirection was dissimilar, so I'm not sure if they can be directly compared.

glueguy (Forum Supporter)
glueguy (Forum Supporter) Dork
5/10/21 11:46 a.m.

We just had a leased car come to the end of term.  It was leased to fill a short-term problem, so the plan all along was to turn it in and be done.  We ended up selling it to Carmax for $3100 above the residual buyout, which is crazy because they'll put it on the lot for at least $2k above that, or close to 40% over what Honda projected the car would be worth.

dean1484
dean1484 MegaDork
5/10/21 11:59 a.m.

People with leased cars coming due are in a really good position. 

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