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Finding an affordable used car just got harder — again. After a brief respite in which buyers got to breathe easily amid several months of price decreases, new data shows that used car prices are back on the rise.
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What the data says
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In March, the average car price rose $145 from February, bringing the average sticker price of a used car to $26,213. That’s according to Kelley Blue Book, a vehicle research company, which released a report Wednesday detailing the rise in used car prices.
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But as used-car prices trend up, new cars continue to trend down in price. In March, the average new car sold for less than its advertised price.
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The reason for this divergence is at least partially rooted in supply. While dealers are seeing consistent inflows of new vehicles, used cars are becoming harder to source.
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These supply issues stem from a number of different factors, according to an analysis from car insurance app Jerry.
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For one, the supply chain crunch that kept new cars off of lots in previous years have led to a frenzy of used car-buying. Leased cars, which are a large source of used car inventory, have also proven hard to come by as people increasingly chose to buy their cars outright at the end of their leases rather than trade them in.
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Inventory is so low that dealers had only a 40-day supply of used cars in March, down from 44 days in February. For comparison, in January 2022, it was standard for dealerships to have 50 days’ worth of used cars.
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Bottom line
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The easing supply chain constraints that hindered the new car market for the last several years have been a boon to buyers. But the used car industry is another story, as fewer dealers are finding wholesale used car stock to bring to their lots.
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Kelley Blue Book’s report mentions that the hardest used cars to come by are also often the cheapest ones. While the supply for used cars in general stands at about 40 days, the supply for cars under $10,000 is just 29 days.
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This means buyers on especially tight budgets may be bearing the worst of the used car inventory issues.
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this story was originally published April 20, 2023, 1:57 PM.