INDIANAPOLIS (WISH) — If you’re looking to a buy a car these days, you better not be too picky and also be prepared to pay more, especially for used cars.
It’s all part of a car shortage that’s happening all across the country. Prices are just exploding. CarGurus.com, which tracks used-car sales said prices have gone up 29% since 2020, and up 17% within the past 90 days.
“I’ve never seen it like this,” said Jihad Saadeh, sales manager at Midwest Motors on West 10th Street.
Looking for a car right now isn’t easy. “It’s crazy man. It’s been a wild ride the last year or so,” Saadeh said.
Saadeh said a computer microchip shortage has put the squeeze on new-car dealerships, which are now buying cars at auction at “crazy prices” just to fill their lots. So, Saadeh has to do the same.
Cars are now selling at auction for prices they would typically sell for retail.
Saadeh said he tries to make from $1,500-$2,000 a car, but that’s just not possible these days. “Right now, you’re just trying to buy them to put inventory on the lot, even if you’re making $1,000 on a car.”
Saadeh said Midwest Motors had 35% more sales in the first five months of 2021 than the same time period last year.
In addition to the microchip shortage, he believes federal coronavirus-relief stimulus checks and the delayed tax season have helped.
According to CarGurus.com, the average price of a used car is more than $26,000, up almost 30% from this time in 2020. Pickups have seen the highest markup at 43%. Vans, sport-utility vehicles and sedans have seen markups from 29%-32% year over year.
The sales manager at Midwest Motors said customers appear to be willing to cough up the extra cash. “They’re willing to pay it. With them not being able to buy new cars as steadily as they are usually able to, we’re seeing them willing to pay the price.”
But, Saadeh isn’t always willing to pay higher prices at auction. Inventory on his lot was down to 81 vehicles Wednesday with lots of empty spaces; his lot usually has about 135 vehicles.
He’s worried that the bubble will burst and he’ll be stuck with dozens of overvalued cars he has to unload. “We’re just trying not to get ourselves into a predicament,” he said.
No one seems to have a good idea when prices will start to trend downward. The good news for consumers in all this is if you’re looking to trade your vehicle in right now, while selection may be more limited than usual, you should be able to get maximum value for your car.