The pandemic made it feel like the world was ending – and the world we knew before did end in many ways. But for over a year, experts have been talking about a “new normal” and things returning to where they once were.

The same goes for used cars – used car dealers and automotive experts predicted 2023 prices would drop from the overinflated high they used to be to something more manageable and normal.

But now, new research says the cost of cars could stay at a ridiculous high until 2026. How and why is this happening?

The Rise of Used Car Prices Amid Pandemic Shortages

At the beginning of the pandemic, lockdowns and equipment shortages across the globe caused automotive manufacturing plants to shut down or stop producing new vehicles.

But demand for transportation didn’t go down when supplies did. Used cars had to make up for the lack of new ones, and prices for all vehicles soared as a result.

This was the case from early 2020 to late 2022 – the tide was supposed to turn in 2023 because of demand decrease, new car supply increase, and the general shift toward electric vehicles.

So why are prices so high this year, and why are they set to stay that way for another 3?

2023’s Price Dip Got Hopes Up Too Soon

At the end of 2022, inventory increased for used car dealers, and the production of new vehicles was finally starting to stabilize. This led to a quick, intense price dip for used cars.

Experts used this information to predict a trend of continuously-lowering vehicle costs, but they spoke too soon.

Now that 2023 is in full swing, a used inventory drop, new production problems, and concern about a recession have caused Cox Automotive to re-evaluate and put out a report that used vehicle sales won’t return to pre-pandemic numbers until 2026.

The Current Issues Facing the Used Car Market

The biggest problem driving used car prices up – and keeping them that way – is the increase in leasing and profit for used car dealers.

When companies increase their profit margins, they tend to want them to stay that way or get bigger rather than smaller. Now that manufacturers can enjoy increased profit from their limited supply of new vehicles, they aren’t likely to make a greater supply any time soon.

As for used car dealers, leasing instead of buying and increased interest rates for leases and loans allowed them to recoup some of the money they lost due to a limited used vehicle supply.

Until that supply returns to normal, which isn’t likely to happen for a few more years, prices will stay high.

For the sake of customers and used car dealers alike, we can only hope prices won’t get any higher.