You’ve heard the advice “buy low, sell high” when it comes to your financial investments, but it also applies to that used car sitting in your driveway. If you’ve been holding onto a car that isn’t seeing much of the open road these days, there’s a good chance you’ll find generous returns on it right now thanks to the global microchip shortage. The chip fiasco wreaked havoc on the auto industry causing sweeping production delays and reduced inventory. In turn, dealers are willing to pony up more cash to buy used cars and fill empty lots — good news for you.
Why Is the Chip Shortage Driving Up Used-Car Prices?
COVID-19 restrictions are easing up around the country, but the pandemic is not easing up on the auto industry just yet. Several months after the onset of the pandemic that forced factory shutdowns and dealership closures, it appeared the odds were once again favoring the auto industry. Manufacturing resumed, dealerships opened their doors and shoppers lined up to cash in their stimulus checks. Then, the COVID-induced semiconductor shortage hit, causing more disruption and significant inventory shortages.
Cars.com data shows that new-car inventory dropped more than 15% between February and April, but how does this translate to used vehicles? When new-vehicle prices rise and inventory falls, shoppers go to plan B and opt for used cars. Consequently, used-car inventory fell and prices skyrocketed as demand showed no signs of slowing down.
A Snapshot of Used-Car Prices
Many factors determine how much you can get for your used car. The vehicle’s brand, age, mileage, condition and features all influence its value when selling or trading in at a dealership. Typically, the demand for a specific vehicle type also impacts the value. For example, pickup trucks and large SUVs are in high demand, whereas the demand for sedans is shrinking. With all the pent-up demand from the pandemic, prices are elevated across the board.
Median Listing Price of Popular Models
To give you an idea of what to expect when selling your used car, we’ve compiled Cars.com data for the median listing price of popular 5-year-old vehicles across a variety of segments including trucks, mid-size SUVs, compact SUVs, and mid-size and compact sedans.
- 2016 Chevrolet Silverado 1500: $31,341
- 2016 Ford F-150: $31,999
- 2016 Ford Explorer: $22,475
- 2016 Honda CR-V: $19,395
- 2016 Toyota Camry (including Camry Hybrid): $15,977
- 2016 Hyundai Elantra (including Elantra GT hatchback): $11,565
Our Own Trade-In Experience
It may not be an ideal time to buy a used car since your options could be limited, but selling a used car is another story. Cars.com has an annual tradition of purchasing the winner of our Best Of award, which means we also trade in one of the previous years’ winners. When we compared the values of the last three vehicles we traded in (all in average condition), we found more evidence of rising used-car values.
2017 Chrysler Pacifica
In December 2020, we traded in our 2017 Chrysler Pacifica for the current Best Of winner, the 2021 Ford F-150. We put approximately 47,000 miles on the minivan before it was time to part ways and in December 2020, the Pacifica’s CarMax trade-in value was $18,000.
How much more could we have gotten if we held onto the Pacifica until today? Just four months later, the same 2017 Pacifica would have yielded $23,000 according to CarMax’s online offer tool, even after we added 5,000 hypothetical miles to the equation. As we suspected, the minivan would have brought in a significantly higher trade-in value of $5,000 (nearly 30%) more.
2019 Genesis G70
When we purchased last year’s Best Of award winner, the 2020 Hyundai Palisade, we traded in a 2019 Genesis G70. We drove our G70 Advanced 3.3T AWD 16,000 miles over the course of one year and the original CarMax trade-in value was $33,000 in December 2019.
Today, the G70 would be over 2 years old, and we added 12,000 hypothetical miles to see just how much the luxury sedan could get us in the midst of the inventory shortage. Although less drastic than the Pacifica, the valuation is once again more fruitful at $33,800, an $800 or 2.4% increase.
2018 Volkswagen Atlas
We were ready to trade in our 2018 winner, the Volkswagen Atlas, exactly a year after we purchased it in December 2017. We drove roughly 20,000 miles over the course of the year. When we traded in the SUV we received $33,000 for it.
To find out how much the 2018 Atlas would bring in nearly two and a half years later, we increased the mileage to 40,000 and entered the vehicle information into CarMax’s tool, which spit out a value of $28,400. Although it’s $4,600 (or 14%) less than the amount we received in 2018, if we take into consideration that the Atlas is over 3 years old with double the mileage of the original trade in, the value still looks favorable.
How to Sell Your Car for the Most Money
If you’re looking to sell or trade in your extra car in the coming weeks, you have an excellent opportunity to get more money for it because used inventory is low and demand remains high. You can sell the vehicle privately or you can sell at a dealership for a reduced-hassle approach.
To get the most money when selling your car, it pays to shop around just as you would do when buying a vehicle. Comparison shop offers from dealerships, and don’t be afraid to negotiate since there is a desperate need for certain inventory among dealers. You can use Cars.com’s used-car value tool to see values for your vehicle as a starting point to find a fair market price, and even sell online through one of Cars.com’s partners.
Prepare your vehicle by cleaning the exterior and interior; also fix minor issues, gather documents like registration and service records, and locate extra keys or SD cards. Finally, make sure you confirm the terms of the sale and when to expect to receive payment. It took our editor-in-chief nearly a week (and several anxious phone calls to the dealership manager) to receive a check when she sold her extra car.
If you’ve put off selling your extra car until now, your procrastination could work in your favor with a higher offer on your vehicle. Take advantage of the current market conditions to empty some garage space and fill your bank account.
Related Video: Driving Smart: Prep Your Car for Sale