SPECIAL REPORT: Current Used Car Pricing

SPECIAL REPORT: Current Used Car Pricing
Special Report: Auction Prices
Image Credit: Vlad Kochelaevskiy/Shutterstock.com

I talked a lot on the Car Pro Show last week about trade-in values. I feel like part of my responsibility to my listeners is to tell you when there are market changes that could benefit you. This sudden spike in trade-in values can save you a ton of money if you have a vehicle to trade.

I spouted a lot of prices on the show last week, and I know that is hard to follow, so thought I would recap for you the vehicles that caught my eye during the auction I watched last week. We were on deadline this Wednesday, but I did get to see about 100 vehicles run through and prices remain through the roof, even more so than last week. I thought we might see a slight drop off in prices this week, but it went the other way: even higher.

New versus Used pricing

Just this week, our friends at iSeeCars.com studied average new vehicle prices as compared to a comparable used vehicle. As I would have guessed, the prices are really close on many vehicles. Bear in mind, the new prices used in the article are averaged. Car Pro Show listener pricing would put these numbers even closer together.

Here's a look at the Top 10 vehicles and the percentage a used car is cheaper than a new one:

Vehicle % Difference From New Dollar Amount
Tesla Model 3 2.1% $923
Toyota Tacoma 4.2% $1,557
Kia Telluride 5.7% $2,456
Ford Ranger 7.1% $2,416
Jeep Gladiator 7.1% $3,373
Toyota RAV4 Hybrid 7.8% $2,808
GMC Sierra 1500 8.2% $4,731
Toyota Tundra 8.3% $3,939
Chevy Colorado 8.8% $3,051
Honda Civic 8.9% $2,309

If you would like to see the entire study, you can do so by clicking here.

Some used vehicles actually cost more than a comparable new one

I know it sounds impossible, but I have seen many times when a new vehicle sold for less than a similar used vehicle. We see this when, in times like now, used prices are sky-high and new vehicles have big rebates.

Here is an article I wrote a couple of years ago, explaining how this can happen:

Actual Auction Prices

I monitor the Manheim auction in Dallas, but this trend of high prices is the same all over the country. Most auction buyers are online since the start of Covid-19, and many thought that would hinder pricing, but it does not seem to have had any effect. In fact, auctions have changed forever due to the Coronavirus.

Manheim sells roughly a car a minute in every one of their auction lanes. In just Dallas, on Wednesday, they are running 26 lanes at the same time. Do the math, it's an incredible number of vehicles and these type auctions are running all over the country. When I logged into the site this morning, Manheim had sold 22,181 vehicles in the last 24 hours.

How it works: A vehicle picture pops up on the screen with pertinent info, like mileage, a condition number ranging from 1-5, and any other important notes like a CarFax caution. The main thing dealers look at is MMR (Manheim Market Report). MMR is the guide price car dealers use to know the current market values, unlike the old days when dealers used the Black Book or NADA guide. Dealers like MMR because it is real-time data, based on actual auction prices in the last 30 days.

Just a few weeks ago, most vehicles sold at about MMR or maybe slightly over or under that price. Below is what I saw last week. I picked vehicles at random in all segments. As I said on air, this spike wasn't just on pickups and SUVs, or exotic cars, but across the board, including some very common sedans. This is what I saw with my own two eyes (for simplicity, I rounded the mileage to the nearest thousandth):

Year-Make-Model Miles MMR $ Sale Price
2020 Toyota Tacoma 8,800 $35,900 $38,250
2018 Toyota Tundra 24,000 $37,000 $40,750
2013 Mazda3 56,000 $7,425 $9,750
2018 Honda CR-V 18,000 $26,500 $29,000
2017 Hyundai Santa Fe 40,000 $19,300 $23,000
2020 Hyundai Palisade 39,000 $39,400 $43,250
2020 Kia Telluride 11,000 $43,300 $48,000
2015 Toyota Tundra 25,000 $38,400 $47,250
2016 Nissan Maxima 53,000 $13,700 $17,000
2017 Nissan Versa 44,000 $7,900 $9,400
2011 Toyota Camry 26,000 $8,200 $11,250
2018 Lexus IS 31,000 $25,800 $29,000
2016 Lexus RX350 59,000 $26,700 $30,000
2016 Rover LR4 50,000 $33,600 $36,750
2010 Bentley Continental 71,000 $42,000 $56,000
2020 Nissan GT-R 7,100 $104,000 $109,500
2019 Ferrari Portofino 3,000 $203,000 $227,500
2019 Lamborghini Urus 32,000 $207,000 $221,000
2005 Porsche 911 60,000 $34,400 $43,000

In conclusion

This is a bubble in the making with used car prices, and we all know bubbles burst. We saw this last summer. Prices spiked at the auction, lasted a few weeks, then got back to normal.

Fueling these crazy used prices is the shortage of new vehicles, due to parts suppliers not being able to keep up with the auto factories. Dealers are also speculating that stimulus checks and tax refunds rolling in will spur sales. Finally, if they can't get the number of new vehicles they need, they'll switch their marketing to used and push those. Dealers have to have something to sell.

Also adding to the competition and high prices are the big box used car dealers like Carmax, Carvana, Drivetime, Vroom and others bidding against each other, trying to keep their lots full and their growth plans in place. When these guys bid against each other there is no telling where the bidding will stop.

If you are thinking of buying later this year and you have a trade-in, you'd be wise to look now. The difference in your trade value could be thousands less in just a few weeks.