What it cost to buy a 3-year-old used vehicle back in 2019 would today only pay for something that is 7 years old in Denver, according to a study from iSeeCars.com.
That trend is national, and it reflects both inflation as well as a decrease in new car production between 2020 and 2022 because of the pandemic. The big run-up explains, in part, why consumers are under such financial pressure, not only when it comes to where they live, but also what they drive.
The auto website looked at over 21 million used car sales to determine the average price of a 3-year-old model in 2019 and what that same model would cost to buy in Denver and other cities.
Across all models, the average cost of a 3-year-old car in Denver in 2019 was $24,449. But by 2023, it was $36,146, a gain of 47.8%. Converted to years, what was spent on a 3-year-old car in 2019 will only buy a car that is 7 years old today on average.
Some models go above that. A 3-year-old Chevrolet Spark cost an average of $10,105 in 2019. But in 2023, that amount would only put someone behind the wheel of a 9-year-old Spark, according to the study.
Same with a Ford Fiesta, where a 3-year-old model went for $11,651 but today a 9-year-old model averages $11,306.
The Nissan Versa, Hyundai Accent and Kia Forte now have 8-year-old prices at the level where 3-year-old prices were in 2019: $10,318, $10,839 and $11,647 respectively.
That is pushing consumers to hold onto their rides longer. The average age of vehicles in the U.S. has increased from 4.8 years on average to 6.1 years. Offsetting some of that blow — the greater durability and reliability of vehicles.
"Cars are more reliable and longer lasting in recent years compared to, say, 25 or more years ago. We see in our vehicle lifespan studies that modern cars simply last longer than pre-2000 model-year cars," said iSeeCars' Executive Analyst Karl Brauer in an email.
Older cars do need more maintenance and repair work, but core components like the engine and transmission tend to be more robust and with proper maintenance can reach 200,000 miles on many models, he said.
"Older cars will generally have worse fuel efficiency and higher emissions than newer cars, but thankfully the numbers haven't shifted too dramatically in the past 10 years," Brauer said.
The UAW strike, if it goes beyond a few weeks, could result in fewer new cars hitting the market, and reverse what had been months of gradual declines in used car prices.
"That lack of new car production could have the same impact COVID did, pulling new and used car prices up. The last few months have seen used car prices declining at an increasing rate, and without the strike, I would fully expect that trend to continue," Brauer said.
Next year, Colorado will offer income-qualified consumers who buy an electric vehicle an additional $6,000 in rebates beyond the $7,500 in federal and $5,000 in state tax credits currently available. To get that money, consumers must trade in a vehicle that is at least 12 years old or has failed emissions testing.
Colorado's Vehicle Exchange Program should help get higher emitting vehicles off the road, but it also has the potential to create more upward pressure on used car prices.
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