Higher prices turn used cars in Fresno into hot wheels. How fast are they climbing?
There’s a record price surge happening in the used-car market, and a new study indicates that the greater Fresno area is near the vanguard of the average increases over the past year.
Among the 50 largest metropolitan areas of the U.S., the Fresno-Visalia market ranked seventh nationwide for the largest percentage increase in average used-car prices – a whopping 21.1% between April 2020 and April 2021, according to iSeeCars.com.
One of the factors that are turning used cars into hot wheels is a shortage of microchips that are increasingly used to power the technology in new vehicles, said iSeeCars executive analyst Karl Brauer.
“The current used-car price increase is unparalleled, and prices will likely remain elevated for the foreseeable future due to the magnitude of the global microchip shortage and restricted new car supply,” Brauer said.
Tim Finegan Sr., owner of Fresno Chrysler-Dodge-Jeep-Ram in north Fresno, said used-car prices are like nothing he’s seen in 50 years of auto sales.
“I don’t know if it’s the microchip shortage or not, but the lack of new vehicle inventory is making things tough,” Finegan told The Bee Thursday. “The market is crazy; it really is.”
In a normal auto sales environment, depreciation occurs quickly and greatly diminishes the value of a new car. Now, in some instances, owners of used cars are able to sell or trade in their vehicles for more than they originally paid. Finegan said he was on his dealership’s used-car lot last week, opened the glove box of a pickup with an asking price of $48,900, and found the original sticker showing the owner paid $36,000 for the truck a few years ago when it was brand new.
“People are getting money now that they couldn’t imagine what their cars are worth,” Finegan said. “Normally you drive a car off the lot and you take a big hit (in value because of depreciation), but that’s not happening like that now.”
Certain used-vehicle models tend to command higher prices than others. Sports cars and luxury cars like the Chevrolet Corvette or Mercedes Benz G class, for example, saw average year-over-year price changes of more than 33%, according to the iSeeCars analysis. Some pickup trucks, including the Ram 1500 and GMC Sierra 1500, saw their prices climb by more than 28% between April 2020 and April 2021.
“These used vehicles have proven to be appreciating assets over the past year – a circumstance not typically associated with used cars,” Brauer said. “Shoppers interested in these vehicles should consider holding off on purchasing them, while consumers who have these vehicles in their garage and are willing to part with them can take advantage of these significantly higher trade-in values.”
“The shortage of new pickup trucks has forced buyers to buy used versions,” Brauer added, “and many buyers are willing to pay a premium because they need trucks for work purposes.”
Fresno Chrysler’s Finegan said many new-car dealers are scrambling to buy quality used cars since they’re having difficulty getting new vehicles on their lots.
“If you drive up and down Blackstone, 99% of the new-car dealers have a lack of inventory; they’re not inundated with vehicles,” Finegan said of the multitude of dealerships along Blackstone Avenue, the main north-south commercial thoroughfare through Fresno.
“We normally stock 300 new cars” between his family’s dealerships in Fresno and neighboring Clovis, Finegan said, “but we’re down to only about 100 new at the two stores.”
