If you are looking to sell your used car in Oakland, California or indeed anywhere in the U.S., it may be best to get in sooner rather than later. The price of cars, especially used cars, has been increasing significantly in the months leading up to the fall of 2021. Indeed, they are some of the largest used car price hikes in decades.

“In June, used cars and trucks showed both the biggest year-over-year as well as month-over-month gain across all categories,” Nick Woolard, an analyst at TrueCar, explains. Prices of used cars have been soaring all year and reached a staggering 30% increase between March and June 2021 in the U.S., as shown by the Consumer Price Index.

Prior to 2021, the previous largest used car price hike in history over a similar three-month period was only 12%, back in 1974. 

Lack of Available New Cars

The reason for this rapidly rising price is the lack of available new cars on the market, primarily for two reasons. Firstly, demand for vehicles in 2021 has spiked massively due to the lifting of some COVID-19 restrictions. 

Secondly, and arguably more importantly, is the shortage of cars in production. Almost all modern vehicles require microchip processors that manage all the modern technology in them, from screens to window motors and air conditioning. During the past year, the world has experienced a mass shortage of these chips, creating a bottleneck in the production of new cars as manufacturers scramble to get enough chips to fulfil production quotas. 

The chips use semiconductors, which have been referred to as “the new oil” due to their high demand. The shortage of these semiconductors is so widespread because they are used in almost all modern technology, not just cars. As a consequence of this shortage, car manufacturer Nissan announced that it would be producing 500,000 less vehicles than usual. 

As well as this, General Motors has had to interrupt elements of its pickup truck production due to lack of semiconductor chips, even reaching a point where thousands of vehicles remained parked and completed save for the vital chips. Even Apple CEO Tim Cook explained to the public in July that chip shortages would affect sales of its phones and tablets, showing just how widespread the shortage is.

Continuing Chip Shortage

Speculation on how long these shortages will last, and thus how long the current price hike on used cars will continue, is extremely varied. Nick Woolard explains that “Experts are expecting this to drag on to the fall, and as far as where consumers can go for alternatives, there aren’t a whole lot of options.” This suggests that prices could continue to surge, and the value of your used vehicle could continue to increase for some time.

On the other hand, we are now entering fall, and other signs such as Sonic Automotive president Jeff Dyke claiming that “That’s all coming to an end,” in reference to the price hikes. If you’re holding on to a used car and wish to sell, it may be the perfect time to get in touch with a cash for cars company such as Cash for Cars in Oakland and get your vehicle sold now, before prices drop.

It depends on what the future holds for the world’s shortage of microchips as well as if the current surge of buyers subsides. According to David Paris, senior manager of market insight for JD Power, “Wholesale prices look like they peaked eight weeks ago, and have been moving down since then,” meaning that it may be only a matter of time before used car sales catch up.