If you bought a car last year, it may now cost more than what you paid

If you bought a car last year, it may be worth more than what you paid now. (Luke Sharrett/Bloomberg/Getty Images)

ATLANTA (CNN) – Typically, a new car is considered a bad investment because it loses a substantial portion of its value when you remove it from the dealer lot. Unless you bought that new car during the pandemic.

In that case, you’ve probably made an amazing investment because now you can probably sell your one-year-old car at a profit or, at least, get back almost what you paid for it, according to an analysis by Edmunds. com Business conducted for CNN.

According to Edmunds.com, typically a dealer selling a one-year-old used car will get about 80% to 85% of its original price. But, according to the site’s most recent data, car dealers can now sell used cars that are one year old for about 95% of the original price. That’s the average. And some used cars and trucks cost more than they were when they were new.

Your Jeep Wrangler, Subaru Accent or Honda Civic cost more than it was a year ago when it was brand new, for the simple fact that it exists. This is a car that has already been made, at a time when there is a huge demand for cars and SUVs and there is not enough inventory to meet that demand. Automakers are having trouble making new cars due to disruptions in the supply of critical computer chips.

In an extreme case, a 2020 Chevrolet Corvette costs $26,000 more than a new car a year ago, according to an analysis by Edmunds.com. People were paying an average of $81,000 for a brand new Corvette last summer. (It was slightly more than the sticker price.) According to Edmunds.com, the current retail price of a one-year-old used Corvette is about $107,000.

According to Edmunds.com, Jeep Wranglers bought last summer now cost an average of about $3,200 more. A Subaru Ascent costs about $1,600 more and a Honda Civic costs about $1,700 more.

Two factors are causing this strange, backward-seeming price gap: lower prices for new cars a year ago, and higher prices for older cars now, Durie said.

New car customers were scarce a year ago as the coronavirus lockdown made car buying difficult and many insecure about their financial future. Drury said new car inventories were high at the time and car dealers were open to negotiations. This brought down the prices of those cars.

That situation has now reversed. Customers have returned to the market in search of cars, which are unavailable due to supply chain delays and disruptions. Your used car, then, is starting to look very, very nice. If your car dealer is sending you a letter asking if you want to sell back the car you recently bought, here is why. Given the extraordinary demand for cars at the moment, if you have a great car to sell—especially if it’s even close to new—you’re in for a pretty good bargain.

If you’re selling or trading in a car yourself, don’t expect to get this type of markup. Used car values ​​in Edmunds’ analysis represent what a used car dealer can sell the car for. If you sell the car yourself, either directly to a new owner or to an older car dealer, you will usually get a little less than the dealer would pay for selling the car. While it’s difficult to track these types of transactions reliably on a broad basis, Drury said, Edmunds.com didn’t have an estimate of prices in situations like these.

According to Edmunds.com, if you trade your car in with a dealer when you buy a new car, you’ll get 5% to 15% less than its full retail value — significantly less.

For example, according to Edmunds.com, the Corvette costs only $10,000 more than its original purchase price as a trade-in.

In most cases, even cars that have increased in full retail value since they were purchased a year ago will still net slightly less than their purchase price as a trade-in. For example, Jeep Wranglers would get about $2,300 less than their original purchase price when sold back to a car dealer. A Honda Civic costs about $1,200 less than its original price. However, a car buyer usually incurs a smaller amount than the financial hit when trading in a car after a year. In general, someone trading in a car after a year can expect to lose about 20% to 25% of its value, Durie said.

Pickup trucks, especially heavy-duty trucks, are especially prone to this upside-down price equation. One reason for this is the growing popularity of camping, Drury said, with people looking to bigger trucks to tow their new RVs. A Ram 2500, for example, is also about $5,200 more as a trade-in than the average purchase price a year ago. According to Edmunds.com, the F-250 can be traded for about $3,300 more.

This strange situation is not likely to end anytime soon, Drury said. Even if car companies are able to replenish their supply of computer chips, it will take a long time for production levels to meet all the demands.

“I give people a year before they see dealership lots like they’re used to,” he said.

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