AUSTIN (KXAN) — Are you in the market for a used car? If so, prepare to pay up.
Nationwide, the average price of used cars increased by 30.4% in March 2022 compared to the previous year, according to a new report by iSeeCars.com that analyzed 1.8 million used car sales. That’s an average increase of $8,032 year-over-year.
In Austin, the increase is slightly higher. Used cars are selling for, on average, 32.1% more this year compared to last. The average increase in Austin is $8,404.
The good news? While prices are much higher than last year, the March numbers are down from February, which saw a 35% increase nationwide from February 2021.
So what’s driving the higher prices?
“Used car prices remain elevated due to lingering supply constraints, and could rise again due to geopolitical factors as Russia is a key supplier of materials used to make car parts and microchips,” said iSeeCars Executive Analyst Karl Brauer. “We are also seeing a significant increase in demand for used hybrid and electric vehicles as a result of high gas prices, with the cost of hybrids increasing by 40.5% and electric cars increasing by 36.3% compared to last year.”
The San Francisco market saw the biggest jump in prices between March 2021 and March 2022, an increase of 36.9%. Miami and New York City also saw increases of more than 35%.
Austin ranks 11th among cities with the largest percentage increase in prices, the highest of any city in Texas included in the report. Houston ranked 37th, with an average increase of 28.7%. Dallas/Fort Worth and San Antonio ranked 49th and 50th, with average increases of 21.2% and 10.9% respectively.
Which car models are seeing the biggest jump in prices? According to the iSeeCars.com report, it’s small, relatively-affordable cars and alternative-fuel vehicles.
“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 years,” Brauer said.
Nationwide, the Hyundai Sonata Hybrid saw the biggest increase in prices. A used model sold for an average of $25,620 in March 2022, up from $15,629 in March 2021, an increase of 63.9%.
In the Austin market, the BMW 3 Series had the biggest jump in prices, up 59.9%.
iSeeCars.com does offer some tips if you’re looking to buy a car:
- Wait if you can: New car inventory is expected to improve in the second half of 2022, which will also create more used car inventory as buyers trade in their old cars. If you’re able to wait longer than that, your wallet will thank you. Higher prices and reduced inventory are expected to continue well into next year.
- Be flexible: If you need to buy a car now, you may have to compromise on the exact make, model, trim or color. Also be flexible in where you’re looking to buy your car from, as other options may be available a little farther away from where you live.
- Trade in while the market is hot: Trade-in values are high right now, so take advantage of that!
- Consider buying out your lease: Lease rates are also high currently, so if you’re nearing the end of your lease, consider purchasing your car outright instead of starting another lease. When you originally signed a lease, you should have been given a buy-out price. Because the start of the lease was before the microchip shortage, the buyout price is likely well below the current market value.
- Compare new and used prices: In some cases, used cars are selling for even more than new versions. If you’re looking for a lightly-used car, compare the prices to a new car just in case. Interest rates are also usually lower on auto loans for new cars than for used cars.
“The best way for American consumers to avoid significantly higher prices while car shopping for the foreseeable future is to either maintain their current vehicle or purchase a used vehicle that isn’t in high demand, and to be as flexible as possible with factors such as color and trim,” Brauer said.