New data by Edmunds indicates that the average value for all used vehicles traded in during the month of March hit an all-time high, climbing to $17,080, compared to $14,160 a year ago.
Edmunds analysts say that demand is soaring for used vehicles as chipset shortages continue to severely constrain the supply of new vehicles in the market: new vehicle inventory on sale at dealerships nationwide is down by 36% in March 2021 compared to a year ago.
According to Edmunds data, trucks retain the greatest value and command the highest trade-in prices of all consumer vehicles in the market right now. Edmunds analysts took a look at all 2018 model year vehicles traded in during March and determined their respective retained values by comparing the average trade-in price of each model against its average original MSRP. Ford F-250 Super Duty, GMC Sierra 2500 Heavy Duty and F-350 Super Duty all tied for the No. 1 spot on the list, retaining 80% of their value on average.
“The chipset shortage is wreaking havoc on new vehicle production, but we’re also seeing surprisingly healthy car shopper demand, which has likely grown stronger in light of vaccines rolling out quicker than anticipated,” said Jessica Caldwell, executive director of insights for Edmunds. “These two factors combined are disrupting the market in a way we haven’t ever really seen before.”
Edmunds analysts say that consumers who might have typically been new-car shoppers are increasingly turning to the used market in search of more alternatives and better value. Traffic to the Edmunds website’s used vehicle inventory pages jumped approximately 300% in March compared to a year ago.
“It seems impossible, with the pandemic still raging in many parts of the country, that new vehicle sales could be at the highest March level in more than two decades, but here we are,” said Caldwell. “Until automakers can start cranking out new vehicles again, we’re going to see increased demand and higher trade-in values for used vehicles as well.”
Edmunds experts note a positive trend that’s emerging as a result of rising trade-in values: fewer consumers are upside down on their car loans, and those who are upside down owe less. According to Edmunds data, 30% of all vehicle trade-ins during March had negative equity, compared to 40% last March. The average amount owed by consumers who were upside down on their car loan was $4,583 in March, compared to $5,405 a year ago.
“If you were upside down on your car loan a few months ago, there’s a decent chance that you could be in the black today,” said Ivan Drury, senior manager of insights for Edmunds. “Consumers who own a vehicle and are thinking of making a new car purchase in the near future should consider pulling the trigger now. The inventory situation isn’t going to get any better any time soon, and you could essentially be wiping away multiple car payments with the added value of your trade-in.
“Many consumers believe the old adage that you lose half the value of your vehicle when you drive off the lot, but that is simply far from the truth today. In fact, we’re seeing many vehicles hold a huge amount of value multiple years into ownership. Every car owner out there should take a minute to check how much they can get for their vehicle, no matter the age or mileage or condition that it’s in. You could have extra money sitting in your driveway and not even know it.”
For more automotive research and insights from Edmunds, click here.