NEW ORLEANS — There’s an old saying that says the moment you drive your car off the lot, it’s not worth what you just paid for it.
But that’s not necessarily true anymore.
According to Kelley Blue Book, the price of used cars has gone up around 40% over the last two years. In some cases, that means you can see the car you bought three years ago for a profit.
“Price always go up on new cars, that’s just the way it is,” Matt Degen, editor for Kelley Blue Book said. “What’s really abnormal is how fast and how high they’re going.”
The reason used car prices are shooting up is because there’s a shortage of new cars. Not enough new cars means that used cars are in higher demand and sellers can charge more.
So, why are there so few new cars? Due to supply chain issues and the global computer chip shortage, car manufacturers just aren’t building as many cars as they used to.
“It's just it's economics 101, it's supply and demand,” Degen said. “It’s not that people weren’t buying cars, there was demand for them. It all goes back to a supply issue.”
That’s driven up the average price of a new car to about $43,000 -- more than $5,000 or about 14% since the pandemic began, according to Kelley Blue Book. And sticker shock is even worse when it comes to used cars. The average used car sells for just under $27,000 now. About a 40-percent jump over the same amount of time.
“Which is just mind boggling and that’s the reason your seeing situations where you have a car that’s actually worth more now than it was a year or two ago,” Degen said.
Unfortunately, it doesn’t look like prices are going down anytime soon – at least not drastically.
At Auto Direct in Mandeville, owner Jason Doss says you can still find a reliable used car for less than $10,000 and if you can trade in your old car, there’s never been a better time to do it.
“The fact of the matter is that it’s true … you can sell (some cars) for higher than what you actually purchased it for three years ago – which is unheard of,” Doss said. “I would definitely tell people to take advantage of it now, because we don’t know how long that’s going to last.”
Even though the prices have changed, Doss says the rules of buying or selling a used car remain the same. Always do your research ahead of time and if you’re buying a used car, have a trusted local mechanic check it out before you make a final decision.
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