The number of used cars priced below $20,000 in metro Detroit has plummeted this year compared with four years ago, new data shows.
A study from iSeeCars.com looked at 1- to 5-year-old used cars in the first seven months of the year in metro Detroit and found 12.8% priced below $20,000 compared with the same time frame in 2019 when 52.7% were $20,000 or less. iSeeCars.com is a data-driven car search and research company that helps consumers find car deals.
The Grand Rapids-Kalamazoo area didn’t fare much better. The study found affordable used cars are equally scarce there too: The share of used cars priced below $20,000 dropped from 49% in 2019 to 11.9% this year.
“Among the pandemic’s many casualties is the affordable used car, which has nearly vanished from the used car marketplace,” said iSeeCars’ executive analyst Karl Brauer, a former executive editor of Kelley Blue Book. “In 2019, used car shoppers with a budget of $15,000 could afford over 20% of the late-model used car market. Today, that budget only gets them access to 1.6% of the market.”
Higher prices and more mileage
Brauer said it’s a supply-driven problem. Over the past three years, first with the COVID-19 pandemic factory shutdowns and then with a shortage of semiconductor chips crippling new-vehicle production, automakers have not produced the usual volume of new vehicles they typically did in years past. That lack of new-car inventory drove shoppers to the used car market, causing those prices to rise.
“Then the 2020, 2021 and 2022 model year vehicles that were restricted in production as new cars, have drifted into the used market now and there just aren’t enough of them,” Brauer said, explaining the high prices for used cars.
In Detroit, the average price of a 1- to 5-year-old used vehicle during the first seven months is up by 43.5% to $32,126 compared with $22,389 in the same period four years ago, he said.
For the study, iSeeCars analyzed over 10.8 million used cars nationally that were 1 to 5 years old sold between January and July of 2019 and the same period for 2023. The list prices and average odometer readings were tallied and aggregated to compare the share of cars at various price points across the two periods, the company said.
Nationally, the average used car’s price has increased by 47.7% since the pandemic. And, more than half of today’s used cars between 1 and 5 years old also have 20% or more miles than they did three years ago, so buyers have to pay more for cars that have been driven substantially farther.
For example, in Detroit, a used 1- to 5-year-old Toyota Camry saw the biggest price increase of all models, jumping nearly 50% in price. In the first seven months of 2019, a used Camry sold for an average of $16,505. In that same period this year, the average price is $24,741.
Those same aged used Camrys in Detroit that were priced under $20,000, in 2019 they averaged 39,834 miles on the odometer, but in 2023 they averaged 81,452 miles on the odometer, for a 104.5% increase, Brauer said.
Look on the bright side: Higher trade in values
Edmunds.com is seeing similar trends in its data on used car prices and inventory in Detroit, according to Ivan Drury, director of Insights at Edmunds.
In Detroit, the average list price for a used car in mid-August was $28,077 compared with the same period in 2019 when it was $20,533, Drury said. The used-car inventory is down by 6.3% compared with 2019 and the average age of available used cars now is 4.8 years old compared with 4 years old in 2019.
“The average age increase is due to dealers having to resort to buying and keeping older vehicles on their lots in order to have some sort of inventory for sale,” Drury said.
Drury’s data is based on mid-August snapshots of inventory for metro Detroit dealers that are on Edmunds program.
“Most of the findings are in line with the rest of the U.S., which means that Detroit is also seeing a shortage of newer used vehicles,” Drury said. “Average used car listing age has increased, but so has the price. This has become the norm. Vehicle prices have increased across the entire range of age and miles.”
He said used cars priced at or below $20,000 do exist, but not at the volume they did before the pandemic.
“Gone are the 1-year-old off rentals with newer features and (manufacturer) backed warranties, lease returns that are likely to become Certified Pre-Owned units and used values that clearly make buying pre-owned a bargain compared to the new equivalent,” Drury said. “I love used cars, but for the last few years I can barely stand to look at listings without shaking my head. But, hey, at least trade-in values are up.”
The vehicles with the biggest price bumps
In metro Detroit, the used Toyota Corolla had the next biggest jump in average price behind the Camry, rising 47.9%, from $13,975 in 2019 to $20,662 now, iSeeCars’ Brauer said.
Here are some other used vehicles seeing the biggest price hikes in metro Detroit:
- Honda Accord: Average price is $26,563 compared with $18,131 in 2019.
- Honda Civic: Average price is $24,050 compared with $16,477 in 2019.
- Hyundai Elantra: Average price is $18,134 compared with $13,231 in 2019.
As for used pickups in metro Detroit, 8.5% of all used Ram light-duty pickups were priced under $20,000 in 2019,, compared with this year when only 0.3% of used Rams are priced that low.
The other pickup that could be found cheaper than $20,000 in the first seven months of 2019 was the GMC Sierra with about 4.1% of the used market consisting of that pickup at that price. Today, it is almost nonexistent with 0.1% of the market, iSeeCars study showed.
How to find a deal
Here are some tips Brauer offers to consumers trying to find something affordable:
- Shop around because there are “pockets of deals” to be found.
- Consider the cost to keep your current car running and, if possible, invest in it to hold off on a purchase.
- Be flexible on what you need versus what you want, and consider competitive brands.
- Consider buying a new car rather than used because it is sometimes cheaper.
“The used market is universally high. The new market is starting to fragment,” Brauer said. “There are some new models that are expensive, and there’s no getting around it. But you have others that are now at MSRP (manufacturer’s suggested retail price), which is cheap in today’s world.”
He said the 2023 Chevrolet Silverado has been transacting close to the MSRP on its window for the past two months as well as the Chrysler Pacifica Hybrid and the Infiniti QX80. For super affordable, there is the 2023 Mitsubishi Mirage subcompact that starts at $16,245 and the 2024 Chevrolet Trax starts at $20,400, to name a couple.
Plus, interest rates on used cars are often higher than those for new cars so a monthly payment on a used car might actually be more than that of a new car, Brauer said. In the first quarter, the average loan interest rate for a new car was 6.58% and for used cars it was 11.17%, according to Experian’s most recent State of Automotive Finance Market report.
The other possible place to find a deal is among used electric cars. Brauer said the Hyundai Ionic 6 and Ionic 5 are aggressively priced because they lost their $7,500 federal incentive.
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Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber