Horsham, Pennsylvania – October 12, 2022 – One of the great untold stories of the auto industry is that there are over 13 million private party used car transactions every year in the United States. That means there are 26 million private parties involved – sellers and buyers – representing a segment of the market that is vastly underserved.
Shopping for used cars gave consumers one of the biggest sticker shocks of the pandemic. The well-documented shortages of chips and other essential auto parts that curbed the supply of new cars created a void filled by demand for used cars. In turn, the reduction of new car inventory led to fewer off-lease cars being returned to dealerships as more consumers held on to their current car.
Additionally, the chip shortages caused car manufacturers to cancel many of their “fleet” contracts with rental car companies and major corporate accounts. This led to companies like Hertz and Avis buying as many as three million 2019-or-newer cars through wholesale auctions.
That caused prices to spike above MSRP, even for three-to-four year old vehicles, with dealerships offering used cars at nearly the same price as a new car. The rise in used car pricing is a big part of why U.S. inflation has hit a string of four-decade highs in recent months.