According to market research firm Bianco Research's President Jim Bianco, dealer-discounted used auto prices are increasing faster than the stock market and certain cryptocurrencies.
According to Bianco, used vehicle prices have increased by more than 20% in the previous four months, according to Manheim's index of used automobile rates.
According to Manheim's most recent data, wholesale used car prices have risen significantly, while vehicle inventories, which are already at a historic low, stayed longer on dealership lots.
Over the next year, used car prices are expected to climb 30% on average, according to the Manheim Index.
“As of December 15, the latest set of data we’ve got, they’re just accelerating higher and higher right now. There’s no peak at least as of now,” the report stated.
According to a report from Kelley Blue Book, new vehicle prices hit an average of $27,569, up 27% from the same period last year.
Indeed, used cars are likely going to be more expensive as customers rush to buy them whenever inventory is available.
“It has all the tell-tale signs of a bubble,” he said, adding that used cars are depreciating assets and that prices are not meant to be so high.
Chip shortages caused havoc on many automobile manufacturers across the world, with prices of both new and used automobiles rising to levels not seen in years.
The biggest automakers including General Motors Co (NYSE:GM), Ford Motor Co (NYSE:F), Tesla Inc (NASDAQ:TSLA) and others have struggled to push through a global chip shortage for over a year now. The shortages began in 2020 when demand sprang back from pandemic induced lockdown lows.
AutoNation Inc. (NYSE:AN), the biggest U.S. auto retailer, reported a record profit in October in spite of lower inventories. The company warned that dealer inventories are apt to remain tight for much of 2022.
For perspective, the firm had roughly 5,000 new vehicles in inventory at the end of September, compared with 56,000 this time last year.
AutoNation shares rose 65% year-to-date. The stock closed up 0.34 percent to $112 per share in Thursday trading.