The national average price for used cars is now $29,000 – a 42% increase since the start of the COVID-19 pandemic, according to the Associated Press (AP).
A car that is nearly 10-years-old with over 100,000 miles was listed for $7,500 at Jeff Schrier’s used car lot in Nebraska, The AP reported.
“I’ve never seen anything remotely close to this — it’s craziness,” Schrier told The AP.
Used car dealerships around the country are showing the similar price ranges for older, used cars with a lot of miles. Popular website ISeeCars.com shows similar rates.
Overall market inflation rose 6.8% for the year ending November 2021, according to the Bureau of Labor Statistics.
The fault lies with computer chips, The AP reported. As the demand for cars lessened due to COVID-19 lockdowns, the demand for personal electronics skyrocketed.
Production companies shifted away from producing computer chips for cars and instead started making consumer electronics, according to The AP. After the economic recovery following the lifting of lockdowns, chip companies simply couldn’t produce them quickly enough. (RELATED: The Global Chip Shortage Is Driving Prices ‘Sky-High’: Here’s How It Could Affect You)
This high demand, coupled with low supply, drove an increase in price. Kimberly Palmer of NerdWallet told The AP that “the average person can’t afford the average used car right now.”