NORFOLK, Va. – Old Dominion University student Isabel Colon, 19, is looking to buy her first car, but her excitement quickly deflated Thursday after noticing the prices for used.
“I did noticed that a lot of used cars are going for the same prices as brand new cars, especially ones that only have 1,000 miles on it, so that definitely added to the stress,” said Colon of Chesapeake.
And she’s not wrong. A three-year-old Honda CR-V costs nearly $32,000, almost the price of a brand new car.
New numbers released from the U.S. Labor Department Wednesday show used car prices are up 26.4% in the past year. Part of the reason is the pandemic is continuing to cause a shortage of computer chips to build new cars forcing people to buy older ones.
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“We usually have about 370 cars on the lot,” said Chad Frick, the sales team leader at Checkered Flag Honda in Norfolk. “Right now, we’re probably dealing with about 92, 93 cars on the lot.”
Frick said before the pandemic, his Checkered Flag Honda lot was full of new arrivals. He had 250 new cars on the lot but now, he only has seven. For preowned cars, he used to have 120 cars on the lot, but now has about 85 used cars.
It’s an issue felt across all major dealers.
“You don’t have any more new cars,” Frick said. “That obviously is now affecting used cars, which is driving the prices on any car that’s available.”
Over the last couple of months, he’s noticed the problem has worsened.
Dealers are now changing the way they do business as cars are snatched up before even coming off the trucks.
“We’re selling cars now,” Frick said. "We have, I think, about 47 cars that are pre-sold that haven’t gotten to my dealership yet, so people are buying cars two to four months out.”
As for when a big inventory of new cars will come in and for his lot to look like it did before COVID, Frick believes that could take up to eight months.
Meantime, Colon said stress aside, she’s getting a good deal on a used car at Checked Flag Honda but is feeling the pinch elsewhere as inflation takes hold on almost everything.
“I’m working two jobs, and I’m about to pick up a third just because of everything going on,” she said. “I have a family, too, that I need to help out all the time, but hopefully getting this car will really help me out.”
Dealers say if you’re leasing a car, chances are it’s worth more now than what the manufacturer anticipated, so if you want to trade out your car sooner, you’re likely to make money on it.