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Experts say used car prices are soaring

Published: May. 24, 2021 at 7:24 PM CDT
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HOMEWOOD, Ala. (WBRC) - Analysts say now is a great time to sell a car, but not so great if you’re looking to buy one.

And if you’re in the market for a used vehicle, you’ve probably noticed that prices are soaring. The sales manager at Homewood Auto Sales said the price of a used car is up more than 30% over last year.

He said there are several reasons driving this surge, including that computer chip shortage that’s causing a slowdown in new vehicle production causing demand and supply issues with used cars.

Ihsan Khlaf is the sales manager at Homewood Auto Sales. He said he usually has between 30 and 40 pre-owned vehicles on his lot at this time of year.

But now, there’s only 15 or 20.

“Most of all, it’s been a shortage of newer vehicles in the past year. Recently, due to a manufacturing halt like the rest of the world, as well as… really a few other factors that all combine to a shortage of vehicles ‘cause that’s really the heart of the issue is a shortage of both for new and used vehicles. Obviously, a shortage of new vehicles will lead to a shortage of used vehicles,” Khlaf explained.

Khlaf said building his inventory has also been difficult because he’s competing with rental car companies that can’t get their hands on new cars.

“Now it’s becoming even where they’re taking used vehicles from the auctions themselves, so instead of giving a lot, they’re actually taking some as well,” Khlaf said.

This scarcity is driving up the price of used cars both domestically and internationally. Analysts said the financial crisis, caused by the pandemic, is also forcing many to hang onto their cars longer. That means fewer people are trading in their cars adding to the shortage.

“This looks like it’s going to be the situation at least through the rest of this year,” said Clay Ingram with AAA Alabama.

“What we need is the car manufacturers to kind of get back on track and produce the kind of normal numbers that we typically see from one year to the next and for that to happen, we’re going to have to have this computer chip shortage figured out,” Ingram explained.

Experts said if you’re in the market for a used or new car, do your homework.

They encourage using price comparison websites to help you get the best deal, and you may have to travel a longer distance to get the vehicle you want at the best price.

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