I’d never, ever call my 2004 Pacifica a clunker. But it has played one in print more than once when I’ve written about how old cars are bringing home some serious cash.
Back in 2010, used cars were in hot demand and short supply after a Great Recession strategy took many older cars off the road as a way to push new metal off the lot.
Cash-for-clunkers, which ran in July and August 2009, took nearly 700,000 used cars out of circulation. The federal program offered up to $4,500 for a clunker. Yet program rules required that clunkers be crushed or shredded.
So in late July 2010, I took my 2004 white Chrysler Pacifica out for a test. The car had 77,000 miles on it. It had plenty of bells and whistles, including heated leather seats and backseat DVD player, which I can’t imagine why anyone would need that today. It was the car I loved to drive to chaueffer my son through most of grade school and, later, even the start of high school.
Two dealers looked it over. One saw a dent in the back bumper, as well as a smaller ding on a front fender. One dealer said about 90,000 would be average for a 6-year-old car, so the lower mileage on my car was attractive.
One dealer offered $4,500 and another $6,800 in the summer of 2010.
And now 11 years later, what’s that Pacifica worth as we’re hearing about a surge in 2021 on prices for older cars? I suppose the real shocker is that I still own what is now a 17-year-old car. But we’ll get to more on that later.
What’s driving a surge in used car prices?
The hot summer car used to be a convertible but now, who knew, it’s the clunker.
Now, high-mileage, older cars and trucks – which can be the most affordable to buy – are increasingly tough to find on dealer lots, according to Cox Automotive.
The number of high-mileage vehicles available on retail lots dropped to around 11,700 in early June, according to a Cox Automotive report. The average miles: 121,000.
That’s down about 40% from a year ago.
“The Great Recession left us with far fewer 2009-2011 vehicles than the ages on either side,” said Jonathan Smoke, chief economist for Cox Automotive.
The country is likely to face a similar issue in a few years, he predicted, when we’ll see far fewer 2020 and 2021 vehicles on the roads.
New car sales were constrained in 2009-2011, as the auto industry and the U.S. economy struggled to recover from the severe recession.
Now, new car sales are stalling as many consumers can’t afford the high price of a new car. On top of that, the semiconductor chip shortage is slashing the supply of new cars and big trucks on dealer lots.
Some people got plenty of stimulus dough and spent that money on cars, too, depleting some inventories, as well.
While you will lose older vehicles to scrappage over time, drivers can try to keep an old car running when recessions hit, their pocketbooks feel a pinch and they can’t afford or find the new car or truck that they really want.
Smoke expects the used car market to face limited supplies at least through 2024. Even so, he said used car prices at the retail level appear to have peaked around the week of July 5.
Prices amaze buyers and sellers
Consumers could be shocked by how much they’re paying for used cars – and how much they could get on a trade-in if they’re trying to unload a vehicle.
Prices on used cars rose so sharply in June that the roughly one-third of the seasonally adjusted inflation surge in June was blamed on rising prices for used cars.
The prices of used cars and trucks rose 45% over the past year, according to the U.S. Bureau of Labor Statistics.
So, it’s getting harder for car buyers to find a bargain.
“Used vehicles in the ‘under $15,000’ price range are all but nonexistent now in retail, whereas last year they accounted for more than 18% of the market,” according to Cox Automotive.
On average, 5-year-old cars sold for roughly $24,000 in June – up 36.3% from an average of $17,636 a year ago, according to research from Edmunds.com.
On a 7-year-old car? We’re looking at average transaction prices of around $18,000 – up 44.5%.
In some cases, popular vehicles are selling for a higher price used than they did just a year ago when new.
A 2020 Ford F-250 Super Duty truck sold for $60,785 last year. But the inventory squeeze a year later drove up the used car sale price to $70,943 in July, according to Edmunds.com.
A 2020 Subaru Crosstrek sold for $26,804 new but the used car crunch drove up its used price a year later to $30,082 in July, according to Edmunds.com.
What’s perhaps even more shocking is that drivers are spending more on cars and trucks with mileage around 100,000.
The old adage that a vehicle’s value tumbles dramatically once it crosses the 100,000 mark is being proven wrong, according to Ivan Drury, senior manager of insights at Edmunds.
Consumers in general are more willing to buy higher mileage vehicles, as quality has improved and the cost of new cars has risen significantly.
We’re looking at an average transaction price of $16,489 in June – up from $12,626 last year – for cars and trucks with 100,000 to 109,999 miles that were sold at dealerships.
That’s up 31% and the highest average transaction price that Edmunds has on record for those vehicles.
Granted, some of that push can be attributed to the demand for expensive used trucks if consumers find very limited supplies of new ones. Demand for used trucks is being driven by the chip shortage that is cutting into new truck production.
Trade-in values have gone up significantly
Take some 6-year-old vehicles. The average trade in value for a 2015 Chevrolet Equinox, for example, was nearly $10,500 in June, according to Edmunds. That’s up 43% from the trade-in for 2014 Equinox a year ago. Average mileage is nearly 86,000.
The average trade-in value for a 2015 Ford F-150 was a bit above $27,000 in June, up 66% from a trade-in for a 2014 truck a year ago.
“If you have a truck, you’re good,” Drury said.Even some 7- to 8-year-old vehicles with more than 100,000 miles are commanding prices today, he said, that are more like the cost of 5-year-old vehicles with 60,000-80,000 miles a year ago.
What’s key to remember? You might not want to rush to sell your old car, if you can’t find the new car that you really want to buy or even lease. If you can’t find a decent deal for your next car, it may not be worth it to sell the old car now.
And you still don’t want to just jump at the first offer you might get for buying your car. Local dealers know their customers so one dealer might be more interested in your car than another. Compare prices online and talk to a few dealers.
What about my Pacifica?
As for my 17-year-old Pacifica? It had 155,581 miles on it in mid-July – a bit more than twice the miles it had on it 11 years ago.
My car was one of the original crossover wagons, and not like the current Pacifica minivan. More of a big, bulky SUV of sorts.
Why did I keep it this long? Well, this is working-class Detroit and sometimes you like to keep a car that’s kept running. (Yes, this car suffered from engine cradle rot later in its life and I sprung for a very steep repair bill. But otherwise, it’s a good car; good engine.)
My son, now an accountant, began driving it in his senior year in high school, and it’s still serving him well some six years later.
So could I make a bundle selling this one? How do you define a bundle?
I’m not seeing any way that I’d get $5,000 for it – which I believe would be roughly 20% of what I paid for a high-content car that ended up loaded with incentives and rebates after DaimlerChrysler’s deeply disappointing launch of what was dubbed a luxury crossover.
Getting a potential price to sell the Pacifica, though, proved to be far easier than I remember back in 2010. Now, you can get an instant offer online.
After plugging in some numbers, including my Vehicle Identification Number, and answering some questions about the Pacifica, I got an immediate offer from CarMax for $600 through the Edmunds.com site.
And I received an Instant Cash Offer via Kelley Blue Book online for $730.
The Kelley Blue Book trade in range listed online went from $703 to $1,444.
Why so low? Well, if you think about it, it wasn’t that long ago when no one would dream of getting $700 on the spot for an everyday car that’s nearly two decades old.
And as much as some dealers might need used cars to fill up their lots, many aren’t exactly paying big bucks to find what I prefer to call a 17-year-old gem.
“For the most part, they’re trying to keep their showrooms looking fresh,” Drury said.
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