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Used-Car Buyers Are Seeing Relief on Once-Soaring Prices

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Rising used-car prices, which have been a big contributor to inflation over the past year, are starting to ease with dealers saying buyers are pushing back on what they are willing to spend.

During the pandemic, prices for preowned vehicles climbed 45%, hitting an average of $29,969 at the end of last year and rising faster than those for brand-new vehicles, according to data from research-firm Edmunds.

The climb has been driven in large part by a shortage of new vehicles, which have also surged in price and left buyers scrambling to find more affordable options. That has pushed many Americans to the used-car lot.

Used-car prices softened in the months heading into spring—usually a prime buying season in the auto industry with people getting tax refund checks. In April, the average price of a used car was $29,948, about $21 less than what it was in December, according to data provided by Edmunds.

“Affordability is certainly an issue,” said

Jeff Williams,

chief executive of

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America’s Car-Mart Inc.

a chain of used-car retailers in the Midwest and South. “What we’re hearing from customers, and potential customers, is that prices are too high.”

The moderation comes as prices on new vehicles continued to climb last month, up 1.1% from March this year and 13.2% higher than in April 2021, according to the Labor Department’s consumer-price index. By comparison, government data showed prices for used cars and trucks fell by 0.4% in April.

Buyers are also paying more for other goods, such as groceries and air travel. Overall, inflation edged down to an 8.3% annual rate in April but remained close to the fastest pace in four decades, the Labor Department reported.

Used-car prices softened in the months heading into spring—usually a prime buying season in the auto industry with people getting tax refunds.



Photo:

frederic j. brown/Agence France-Presse/Getty Images

Across industries, companies have been charging more to offset rising costs. And while initially the price increases were met with little resistance, consumers are now holding off on making purchases in some areas.

Used-car prices were creeping up even before the Covid-19 health crisis. But the factory shutdowns in the early days of the pandemic, coupled with a parts shortage that hit later in the year, have left dealership lots stripped of inventory, pushing prices on both used and new vehicles to record highs.

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