DETROIT (WXYZ) — Car prices on both new and used cars are at an all-time high, in part because of the pandemic.
According to Edmunds.com, from January 2020 to the end of the year, new car prices jumped six percent to a record-setting high of just over $40,000 dollars.
The prices of used cars jumped even higher than new cars with a 14 percent surge, nearly ten times the inflation rate, to over $23,000.
“My prediction by the end of this decade the average is going to be $50,000,” said John McElroy with Autoline.tv.
McElroy has spent the last four decades in the auto industry and says the high prices boil down to three factors. The first, the pandemic shutting down the production of new cars back in March and April of 2020.
“When COVID hit last year and the car companies shut down for eight weeks, that meant that car dealers did not have a lot of cars on their lots. So, they didn’t have to discount what they had, they didn’t have to offer any kinds of incentives, that drove the prices of new cars up and it pulled new cars with them,” said McElroy.
The pandemic also tying into our second factor, rental car companies not contributing to the used car inventory. McElroy says usually the rental car industry buys two million new cars a year, then resells them six months later.
“Because business travel and vacation travel was down so much, they are not buying very many cars and so those cars are not coming back into the market as used,” said McElroy.
Finally, McElroy says dealerships are benefiting from high demand while not having to stock up on a large inventory.
“Car dealers are reporting an all-time record profit, even though there are not has money cars, they are selling them at a higher price they are making more money so going forward I think this is going to be the normal,” said McElroy.
Leasing might be a better option, but it depends on what your wants and needs are.
McElroy says the best piece of advice he can give is to not be picky. Things like model or color might have to go out the window for you to find a good deal.
He also says there is no point in waiting to buy because he does not see car prices going down anytime soon.