Post-Pandemic Used Car Prices Soar at Bay Area Dealerships
SAN JOSE (KPIX 5) — The old adage that you lose money as soon as you drive your new car off the lot may be changing as a drastic vehicle shortage has some used cars selling for more than they did when they were new.
Prices for used cars are spiking, and that’s only if and when dealers can get their hands on them.READ MORE: Santa Rosa Neighbors Blame City After Creek Overflows, Flooding Homes, Forcing Evacuations
“We’re buying a lot of cars from our service customers, off the street and other avenues just to get inventory in. And we’re paying higher prices than we’ve ever paid,” said Mark Normandin, the owner of Normandin Chrysler Dodge Jeep in San Jose.
And that’s saying something from a dealership that got its start in the horse and buggy days.
“All of the used car pricing is escalating because of the demand,” explained Normandin.
It started with a semiconductor shortage, which slowed the number of new cars being built.READ MORE: Los Gatos Mayor Issues Warning To Residents To Stop Harassment At Council Meetings
Then car rental agencies — which sold off inventories last year in the pandemic — couldn’t restock their fleets. So they started buying used cars which created the shortage and drove up used car prices.
Dealers are so desperate they’re asking for leases to come back early or even
asking previous customers to sell back their older cars.
“I was like, ‘What?'” said DeeDee Taft, who recently got a notice from her Audi dealer asking to buy back her ten-year-old Audi Q5 SUV. “They’re supposed to get back to me with a trade-in offer, or just to purchase it. They want to get those cars on the lot, there’s just a huge demand.”
The vehicle shortage has led to an unheard of situation where ordinary, non-collector’s cars are appreciating instead of losing their value, especially loaded pickup trucks and SUVs.
“We’re giving them more on a trade-in than they bought the vehicle brand new for,” Normandin said.MORE NEWS: Lowell High School Alumni File Lawsuit To Reinstate Merit-Based Admissions
No one knows how long prices will continue to spike, but prices are starting to level off at large auto auctions where dealers buy used cars. That could translate into lower prices in the coming weeks or months, according to auto industry analysts.
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