Here’s a textbook example of how inflation can rip a consumer’s buying power to shreds. An average three-year-old used car that cost a little over $23,000 in pre-pandemic 2019 now sells for almost $32,500 today, which is a 41% increase. A consumer with about the same car-buying budget in 2023 would have to instead settle for a six-year old vehicle to maintain the same level of affordability. And this is with pre-owned prices already having dipped somewhat over the past year.
That’s according to a recent report conducted by the online automotive marketplace iSeeCars.com based on over 21 million used-car transactions recorded in 2019 and 2023.
And, yes, we can blame our old friend from Economics 101, the law of supply and demand for pricing many cash-strapped consumers out of the market altogether, or at least forcing them to settle for an older model that’s perhaps aged beyond their comfort zones. The sputter in new-vehicle production from 2020-2022, both related to initial factory shutdowns and ongoing supply-chain issues, is causing a scarcity of recent-model-year used cars on the market.
“Pandemic plant shutdowns have come home to roost in the used car market,” says iSeeCars Executive Analyst Karl Brauer. “With between 20 and 45 percent fewer one- to three-year-old used cars available, there simply aren’t enough models to meet demand. This is forcing used car shoppers to buy much older cars to stay in budget.” With 1- to 3-year-old used car supply down between 20 and 45 percent, buyers that previously shopped for late model year used cars now have to spend much more or consider much older vehicles.”
As if supply and demand forces aren’t exacerbating the affordability issue enough, it’s being compounded by rising gasoline prices, which is tending to fuel some of the steepest used-car price increases among what were, when new, among the most affordable and fuel-efficient rides on the road. Automakers have been whittling down their slower-selling small car lines in recent years in favor of the thirstier pickup trucks and SUVs new-vehicle buyers have been favoring. That, in turn, is limiting the volume of pre-owned subcompact and compact cars being offered.
Case in point, a three-year-old Chevrolet Spark minicar, which was discontinued for 2023, commanded around $9,900 in 2019; in order to obtain one today for the same outlay, one would have to settle for a nine-year old model. The biggest price boosts, according to iSeeCars.com are on six-year-old pre-owned models, which on average now command 53.4% more than they would have in 2019 ($24,210 versus $15,777), and one-year-old rides that now cost an average $46,403 instead of $27,793 in 2019, which is a staggering 67% jump.
At that, an earlier study from iSeeCars.com determined that those seeking the best deals in the used-vehicle market should consider pre-owned electric and gas/electric hybrid-powered cars, which are among the rides that have shown the biggest drops in transaction prices over the past year.
Used Tesla costs have dropped concurrently with their recent new-model price cuts, with the Model 3 sedan dipping in value by 30.5% and the Model X SUV losing 21.3% since mid-year 2022. Other used electrified bargains include the Nissan Leaf, losing 19.2% of its average value over the past year, followed by the Tesla Model S (-19.0%), Hyundai Ioniq Hybrid (-16.2%) and the BMW 5 Series Plug-In Hybrid (-15.5%).
That said, here’s iSeeCars.com’s list of the 16 models that are forcing shoppers to seek far older alternatives for the same amount of money that could have obtained a three-year old version before the Coronavirus upended the old normal with regard to resale values:
- Chevrolet Spark: $9,878 in 2019 now gets a 9-year-old model at $9,692
- Nissan Versa: $10,095 in 2019 now gets an 8-year-old model at $10,148
- Nissan Versa Note: $10,435 in 2019 now gets an 8-year-old at $10,387
- Chevrolet Sonic: $10,659 in 2019 now gets an 8-year-old at $10,552
- Hyundai Accent: $10,464 in 2019 now gets an 8-year-old at $10,609
- Fiat 500: $11,766 in 2019 now gets an 8-year-old at at $11,320
- Kia Forte: $12,031 in 2019 now gets an 8-year-old at at $11,525
- Hyundai Elantra: $12,222 in 2019 now gets a an 8-year-old at $11,925
- Honda Fit: $14,575 in 2019 now gets an 8-year-old at $14,464
- Mazda MAZDA3: $14,497 in 2019 now gets an 8-year-old at $14,530
- Volkswagen Golf: $14,876 in 2019 now gets an 8-year-old at $14,758
- Toyota Corolla: $14,373 in 2019 now gets an 8-year-old at $14,788
- Honda Civic: $16,351 in 2019 now gets an 8-year-old at $15,460
- Toyota Camry: $16,570 in 2019 now gets an 8-year-old at $16,194
- Ford Mustang: $23,584 in 2019 now gets an 8-year-old at $23,755
- Chevrolet Corvette: $53,527 in 2019 now gets an 8-year-old at $52,759
Source: iSeeCars.com. You can read the full report here.
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