Feeling the Supply Chain Pinch!
By: Michele Lee
Junk car prices rose 55% on average across the U.S. in 2021 and the demand continues into 2022.
Scarce new and used vehicle supplies, along with strong used parts demand, were the major factors in the average price of junk cars increasing by 55% in the U.S. in 2021. The average price of a junk car increased by $170.85 between the start and end of 2021. The average price of a junk car started 2021 at $311.87 and finished $482.72.
U.S. junk car prices can vary regionally. Local supply and demand as well as variations in vehicle make, model, condition and content reflect in the prices.
What caused junk car prices to rise so much in 2021?
One major contributor to these high junk car prices was the COVID-19 pandemic-related microchip shortage, which caused the loss of millions of units of new car production. Many buyers who could not find new cars on dealer lots then entered the used-car market, where increased demand there pushed up used car prices to very high levels.
Many price-conscious buyers had to settle for older, higher-mileage used cars that required more maintenance. Under normal circumstances, many of these bottom-level used cars would have been junked or parted out. Many would-be buyers who were priced out of the market decided to hold onto their cars, keeping them out of the used-car market, while many drivers who might have junked their cars decided to fix them up and drive them longer or just let them sit.
Meanwhile, the reduced supplies and the increased demand for used car parts pushed up the values of junk cars. These cars were now being purchased not by junk dealers for their scrap value, but by auto recyclers who would be selling them for parts. This made junk cars much more valuable and brought higher prices. And, this is where we are today.