Used car prices rise in July; Demand remains high for fuel-efficient vehicles

(iSeeCars) — Used car prices are up 10.9 percent over last year as the microchip shortage continues to impact the automotive industry, according to iSeeCars.com’s latest analysis of over 1.8 million used car sales in July. This is slightly up from a 10.5 percent increase in June and marks the second month of slight increases after four months of slowing price growth.

“Used car prices remained steady in July compared to June, and both months marked the first time in 2022 that saw a decrease in price for some used car models,” said iSeeCars Executive Analyst Karl Brauer. “We are also continuing to see a significant increase in demand for used electric and hybrid cars as a result of high gas prices, with the average cost of electric vehicles increasing by 56.7 percent and hybrid cars increasing by 30.5 percent compared to last year.” 

Although the average used car has significantly increased in price, iSeeCars’s analysis also found some vehicles have decreased in price or have lower-than-average increases, providing savings opportunities for consumers in the market for a used car. “This is good news for used car shoppers, and suggests a sufficient number of used cars are starting to enter the market after being far short of used-car demand for well over a year,” said Brauer.

Top 10 Used Cars With the Greatest Price Increases 

The top ten vehicles with the greatest price increases have price changes from 2.5 to 4.0 times the average vehicle’s price increase and are primarily alternative-fuel vehicles with hybrid and electric cars accounting for eight vehicles on the list. 

The used car with the greatest price increase is the Nissan LEAF, which has risen in price by 43.8 percent compared to last year. “The price increase for the Nissan LEAF, which was once the highest depreciating car on the market, is likely due to heightened gas prices as well as the heightened desirability for the redesigned 2018 model that offers increased range and is now coming off lease to enter the used car market,” said Brauer.

Two additional electric cars make the list include the Tesla Model S and  Chevrolet Bolt. “Demand for used versions of the Model S waned in recent months as consumers embraced the more affordable Model 3 and the Model X SUV, but the long wait times for new versions of the Model S, which include March 2023 as the earliest availability for the base model, have driven consumers to the used market,” said Brauer. “The Chevrolet Bolt’s affordability, plus heightened interest in all electric vehicles, has led to its steep used car price increase.”

Five hybrid vehicles make the list including the Hyundai Sonata Hybrid, the Toyota Prius Prime plug-in hybrid, the Toyota Prius, the Toyota Avalon Hybrid, and the Lexus ES 300h. “Hybrid vehicles are in high demand due to soaring gas prices, with the hybrid category as a whole increasing in price by 30.5 percent,” said Brauer. “Hybrid sedans have seen a resurgence in popularity after falling out of favor when consumers previously embraced hybrid SUVs, again reflecting hese sedans’ more affordable price and fuel-efficient drivetrains.”

The Fiat 500x subcompact SUV also makes the list. “The Fiat 500x is one of the most affordable SUVs on the market, with an average price of $21,407, making it attainable for drivers seeking affordable and fuel-efficient transportation,” said Brauer. 

The Porsche Cayenne luxury midsize SUV rounds out the list. “The wait time for a new version of the Porsche Cayenne is over a year, sending buyers who want this luxury SUV to the used car marketplace,” said Brauer. 

Used Car Price Increases By Bodytype and Fuel Type

iSeeCars further analyzed used car prices by looking at the price increases in July 2022 compared to July 2021 by body style and fuel type.

The three bodytypes that have the largest price increases are hatchbacks, sedans, and wagons respectively. “Hatchbacks, sedans, and wagons have the lowest average prices among all bodytypes, confirming the heightened demand for affordable transportation as used car prices remain elevated,” said Brauer. “Additionally, coupes and trucks were the first segments to see big price increases more than a year ago, so their increase over the past 12 months is smaller relative to other body types, while minivans have similarly not seen as big of an increase in demand compared to other segments.”

Electric and hybrid vehicles had used car price increases well above the average for all fuel types. “The rapid increase in gas prices over the past few months has led to a surge in demand for hybrid and electric vehicles,” said Brauer. “Additionally, more electric vehicles entering the new car market, increasing consumer acceptance of these vehicles, and improvements in EV charging infrastructure has further heightened interest for used electric vehicles.”

Top 10 Used Cars With Price Decreases and the Smallest Price Increases 

The top ten vehicles with the smallest price differences over the past year are primarily trucks and sports cars. Five used vehicles have actually decreased in price compared to last year, with four of the vehicles coming from Nissan and its luxury extension INFINITI.

The full-size Nissan Armada has the greatest price decrease compared to last year, costing $3,022 less in July 2022 over July 2021. “The Nissan Armada is one of the slowest-selling vehicles in the segment, and the demand for this fuel-hungry vehicle has likely dropped further amid high gas prices,” said Brauer.

Two American sports cars make the list, including the second-ranked Chevrolet Camaro and the sixth-ranked Ford Mustang. “Sports cars were among the vehicle segments that saw the earliest price increases during the pandemic, so their year-over-year price increases aren’t as dramatic as other vehicle segments because prices for them were already high in July 2021.”

Five pickup trucks make the list, including the third-ranked Nissan Titan, the fourth-ranked Nissan Titan XD, the seventh-ranked Ford F-150, the ninth-ranked Honda Ridgeline, and the tenth-ranked Toyota Tundra. “The Nissan Titan and its XD heavy-duty-ish model are the slowest-selling trucks in the full-size segment, and the Honda Ridgeline is among the slowest-selling in the compact/midsize truck segment, reflecting low demand in the used vehicle marketplace,” said Brauer. “Conversely, the Ford F-150 and the Toyota Tundra are popular pickup trucks and reflect the low year-over-year price increases for the pickup truck segment because their prices were already elevated in July 2021.”

Two luxury vehicles round out the list: the INFINITI QX60 midsize SUV and the Volvo S90 midsize sedan.”The INFINITI QX60 is one of the slowest-sellers in the luxury midsize SUV class, while the Volvo S90 had steadily declined in sales since its debut in 2017,” said Brauer.

Used Car Price Increases By City

iSeeCars looked at the top 50 most populous metro areas to see which metro areas had the smallest and largest increase in pre-owned car prices in July 2022 compared to July 2021.

Oklahoma had the smallest change with a decrease of 1.5 percent, while New York had the greatest used car price increase at 18.1 percent.

Why Are Used Cars So Expensive? Chip Shortage Explained

The prices of used cars are still high as overall demand continues to exceed supply. After microchip suppliers paused production in the beginning of the COVID-19 pandemic, the economic slowdown caused automakers to order fewer computer chips while demand for personal electronic devices increased. As demand for new vehicles recovered, microchip factories became overwhelmed. Automakers were forced to stop new vehicle production due to a supply chain shortage of microchips and semiconductors. As a result of the production disruptions, more car buyers bought used cars due to a scarcity of new cars. There was also increased demand for used cars when many consumers moved away from cities and required personal vehicles. The heightened demand was coupled with reduced supply at dealerships as less people were trading in their old cars, leading to a shortage of used cars. The resulting shortage has caused record high prices for used cars. 

And it’s not just used cars that are experiencing price hikes. New car prices have risen too, with the average new car transacting above sticker price. Car companies have also slashed incentives due to the shortage of new cars, which has elevated the average price paid for new cars and caused buyers to pay over MSRP. 

“Used car prices are still significantly higher than they were a year ago, but they have remained constant over the past few months,” said Brauer. “Buyers who are looking for a used car deal are more likely to find one on a pickup truck or SUV while prices for fuel efficient and alternative fuel vehicles show no signs of dropping in the near term.