In Denver, used cars selling for above dealer’s price

The old adage that a car immediately loses value once the buyer drives it off the lot has held true for decades — until a pandemic-induced microchip shortage limited the supply of new cars this year.

“We have seen slightly used cars, say 6- to 12-months-old and a few thousand miles on them, bring more than what they sold for new, or even more than MSRP,” said Tim Jackson, CEO and president of the Colorado Automobile Dealers Association.

“It’s the craziest thing,” he adds.

iSeeCars.com looked at more than 470,000 new and lightly used cars from the 2019 and 2020 model years that were listed for sale last month. On average, a lightly used vehicle cost 3.1% less than its new version, much narrower than the 10.8% average discount that existed in November 2020 and the 17% gap that existed before the pandemic.

But for at least 16 models, buyers paid more for the used version than they did for a new one. A used Kia Telluride commanded the biggest premium used over new at 8.1% or $3,564, with buyers willing to pay $47,730 instead of an average new price of $44,168.

The GMC Sierra 1500, Toyota Tacoma, Mercedes Benz G-Class and Toyota RAV4 Hybrid were next in terms of the size of the premium buyers were willing to pay.

“Used car prices have risen overall, and prices have dramatically increased for certain in-demand models that may be harder to find on new car lots,” commented iSeeCars executive analyst Karl Brauer in the report.

Although the size of the Denver sample was limited, the survey found that almost-new used cars and trucks sold for a 2.6% premium on average over the brand new versions. And the study identified four models where the gap was especially large.

They include the Toyota 4Runner, where Denver buyers were so anxious last month that they paid $8,463 or 19.6% more than if they just had the patience to wait for a new model to come into inventory.

The GMC Sierra 1500 is another vehicle where anxious buyers bid up used prices to 11.1% or $6,384 above new and a lightly used Toyota Tacoma went for a 9.4% premium worth $3,828. A used Ford F-150 commanded a 2.7% premium.

Brauer pins the upside-down relationship between new and used prices to a severe shortage in the microchips required to manufacture vehicles. Rather than wait to get their hands on the most popular models, some buyers are bidding up used car and truck prices.

“Those looking to save money on a used car in today’s market should consider less popular models that likely won’t carry the same price hikes as the hottest-sellers,” he advised.

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