Junked and wrecked cars have become more expensive, adding another hiccup to the wild used car market.
Per Bloomberg Opinion, prices for wrecked cars are skyrocketing now. Most of the time, these junked cars are sold at auctions. Insurance companies and sellers earn a piece of the pie when the cars are sold. And it seems that these cars are going for massive prices.
- For example, Copart Inc. — a $34 billion company that specializes in auctioning wrecked cars — said this week that it had its highest-ever selling prices for auctioned-off cars.
This has come as vehicles have become technologically advanced. Something as simple as a fender bender will become expensive to fix due to the advances in car technology. So, insurers rather call a car “totaled” and sell it through an auction rather than repair it.
And the current market for used cars has impacted these sales, too.
“The current tight market for used vehicles in the U.S. may inspire more domestic car shoppers to consider a salvaged vehicle with some minor wear and tear instead,” according to Bloomberg.
The used car market has gone wild in recent weeks due to a chip shortage, which happened because of the coronavirus pandemic. Prices have skyrocketed. According to edmunds.com the average price for a used vehicle jumped from $20,942 in the second quarter of 2020 to $25,410 in the second quarter of 2021. And, according to Kelley Blue Book, the average used car price jumped to $25,000 — the first time in history that has ever happened, according to the Deseret News.
“Tighter inventory and fewer discounts in the new car market are pushing shoppers to seek a reprieve in the used market, and this consumer behavior is what’s also driving used car prices to astronomical levels,” according to Jessica Caldwell with Edmunds.