Used car prices have gone up dramatically since the coronavirus pandemic took hold, enough that Kars4Kids took note. In fact, the jump in price was so remarkable, that we decided to take a closer look. What we discovered was this: the average price of used cars increased by 24% more in blue states (states with Democratic governors) than in red states during the months of April through August 2020.
How did we figure it all out? We pored over the data from literally thousands of car donations. The data told us that while at first, used car prices dipped, due to the pandemic restrictions and lockdowns. Then in May, things started to happen with prices rising at a steady pace throughout the summer months.
Supply and Demand
According to Kars4Kids Director of Communications Wendy Kirwan, supply and demand played a part in the increase in price of used cars. Factories were closed, so fewer new cars came on the market. People were forced to buy used cars. At the same time, people who were accustomed to use public transportation were leery of being in contact with the public and were looking for more affordable personal transportation. Used cars fit the bill. Also: the economic downturn as a result of COVID-19 had people looking for more affordable private cars.
The most interesting part of this phenomenon is how prices changed according to red and blue states. What does party have to do with prices? It seems that blue states had tighter restrictions in place for longer periods of time, and this had a greater impact on the market. The states with heavier corona outbreaks, hence more restrictions and extended lockdowns, ended up with steeper used car prices, making blue states a more attractive venue for procuring a used car.
There’s much more to this, of course, and Kirwan lays it all out with charts and detailed data in COVID-19 Jump in Used Car Prices Greater in Blue States, a fascinating read for anyone with an interest in how pandemics plus party politics are affecting the economy and in particular, the used car market.