Used Cars Are Surging In Price, Here's The 10 Models That Are Leading The Price Explosion

It’s been no secret that the price of used cars continues to rocket higher, as we have been writing about for months.

This week, the Wall Street Journal released a list of the Top 10 vehicles that were at the tip of the spear of the rising prices. Leading the charge was the unlikely Dodge Caravan, followed by the Nissan Versa and Toyota Prius.

While not aesthetically pleasing, the top three cars on the list are notably utilitarian: the Caravan can seat many passengers, the Versa has trunk space and the Prius gets great gas milage, as a hybrid. This could be a clue that new drivers are worried more about function over form.

And, with YOY increases of 69%, 66% and 61%, respectively, it looks like they’re willing to pay for function. Ivan Drury, senior insights manager for Edmunds, told the Journal that “bargain hunters are seeking the most affordable options, rather than looking for the newest or flashiest car.”

The list continues with the Kia Forte, the Volvo S60 and the Chevy Sonic. Their prices have risen an astronomical 58%, 56% and 55%, respectively.

Recall, we wrote just days ago that Manheim Used Vehicle Value Index, a wholesale tracker of used car prices, rose to a new record high in January. Prices of wholesale used cars continued to move higher.

Over the last year, the used car market boomed because of a chip shortage for new vehicles. The latest data from Manheim shows that even though prices increased for January, momentum could be stalling (and, in fact reversing). The Manheim Used Vehicle Value Index expanded slightly to 236.3 last month, up 45% from a year ago. The non-adjusted price change declined about a percent compared to December, leaving the unadjusted average price up 40.8% year-over-year.

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The chart below is the Manheim Used Vehicle Value Index on a monthly timeframe with two single-banded momentum indicators showing yet another infect point. The last two infection points turned out to be false flags as the index powered higher on persistent supply chain woes. Now we have credible leading indicators that may suggest this time is different.

There’s growing speculation from JP Morgan that global supply chain constraints have passed their climax. Focusing on major transpacific shipping lanes, we find container prices have reversed in some cases. Shipping rates are leading indicators that may suggest chip shortage could soon abate.

Last month, Jared Bernstein, a member of Biden’s Council of Economic Advisers, revealed used car prices should “revert” once “underlying supply constraint eases.”

Source: ZeroHedge

Top image: Pixabay

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