Has The Used Car Market Gone Insane?

I've got 7 months left on my 19 CX-5 GT Lease. I was going to upgrade and buy a used 2020 Signature at the end of a lease to avoid the depreciation hit. I'm a "Car Guy" this is my 28th car over 36 years (typically owned 2 cars at a time), 2nd lease. The only other lease I did was on an Acura TL-S Sedan and ended up buying it at the end of the lease, immediately listed it on Auto Trader and pocketed $3,500 profit. This time around I only did the Lease to keep the payments down as my credit took a hit after divorce so a purchase, the payments were just a little too high to stomach plus you save on sales tax is you don't purchase the car at the end anyway. My credit is 120 higher no than it was 2.5 years ago (750 versus 630).

I started doing a little research recently and my 19 GT in mint condition (inside and out) with only 20,800 miles (I work from home, even pre-COVID) dealers are asking $500 under the price I paid new (which was $250 over invoice.) I know typically the Dealers will advertise a high-ball price on their used cards and will come down 5-10%. But it seems post-COVID the used market prices have gone completely INSANE! Am I right in what I'm seeing?

So then I started thinking, why not buy the car (current buy out price is $24,400) now, and trade it in on a 2021 Reserve when I *should* be able to get a pretty penny on the trade price? The question though is are they not dealing on the new price due to chip shortage so it's all amounts to a wash basically and I'm better off waiting until the end of the year when things have cooled down? I doubt there will be any end of model year deals on the 2021's though if there's a shortage to begin with and maybe the used market will be cooled down in 7 months so I can pickup a 2020 used for a reasonable price but my gut is telling me that may not be the case. Plus I really need a larger screen. My long vision is great but I'm having a hard time sometimes reading my Android Auto Screen on my 19.

Wondering what other people's recent experience/observations/recommendations are?
 
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2019 CX-5 GTR
So.... there is a lot to unpack in that post.

"But it seems post-COVID the used market prices have gone completely INSANE! Am I right in what I'm seeing?"

So here is the deal .. during COVID (in the United States), the used car inventory went UP and UP as the auto auctions basically came to a stop. So all the used cars dealers bought simply sat, unsold at auction and inventory grew. So coming out of restrictions, people wanted to purchase vehicles again, the problem was all the vehicles "in the system" need to work their way through the system (IE auctions and sales needed to be completed). Now the chip shortage hits, new cars can't be sold because vital components to finish the build are simply not available. Plenty of stories on this with plenty of vehicle manufacture examples. So those people wanting a new car (stimulus money) can't buy one, so they look to the used market. so prices climb on the back of a few factors

1) dealers are not going to flood the market with used product - (Debeers model here) and this gem.
2) people are impatient - have cash in their pockets and buy anything at elevated prices.

TLDR; supply and demand for used cars with several complex reasons driving the pricing behavior.

@ consultant
what to do in your case with a lease? I'd say buy the vehicle, get glasses so you can read the smaller screen, and wait for the chip shortage to resolve itself.
 
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'13 T & '21 Sig
The market is weird recently for sure. We picked up a 2021 Signature on May 1 for 6k under invoice without trying very hard then I sold my beloved 2005 Mazda 3 (no leather, sunroof or Bose) for my asking price of $5,500 within 3 hours of posting it on Facebook Marketplace.
 
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Ottawa, Ontario
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17 Mazda 6 GT
You are correct re: used prices, at least in my experience lately.
I've been looking at a used Nissan Xterra to replace my 19 year old Pathfinder.
The last year of production was 2015, so that is what I've been aiming at.
Last year they were reasonably priced for a decent low mileage unit. Now however, a 2015 Xterra with over 100,000 kms is listing at just $4,000 below original msrp. People are regularly asking nearly $30,000 or more for a 6 year old Xterra. There's one low mileage 2015 Xterra currently listed for $35,000. That's more than it costs when new. I recently saw a 2011 Xterra asking price was nearly $20,000.
It's insane. I won't be buying one anytime soon.
 

Rogue14

2019 CX5 GTR Southern Oregon
Yes the used market is crazy for reasons mentioned above. We have a 2019 CX5 GTR. My daughter bought a red 2020 CX30 Select May 2020 when things were not selling and got a good price ( I think) of $24,335 plus 0% for 5 years. Just for fun, I recently checked Carvana price and they offered $23,500. That seems pretty crazy to me.
 

CarpeDiem

Under Pressure
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Superstitions
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2021 Carbon T
When I leased my CE I still had six months left on the lease for my non-Mazda trade-in. The Mazda dealer paid off the lease and credited me almost $1000 extra. Just wild.

The average vehicle on US roads today is 12.1 years old, a record.
 
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2019 CX-5 Signature
The market is weird recently for sure. We picked up a 2021 Signature on May 1 for 6k under invoice without trying very hard...

I don't see your purchase post, so I'll ask here. When you say $6k under invoice, what was that price? Was it new with no miles?

To the OP. Buy out your lease and wait until the market comes back down. That, or sell it for a profit and buy a beater to get by.
 
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2014 mazda cx-5 touring FWD
Yes it's insane. Used car prices at auction are up about 30% since last year and the dealers are taking it in the shorts getting their used inventory there. That's one reason they can offer more for your trade in ( or outright buy) and sell it for more ,too. People have been buying out their lease car at turn in time because of a very favorable residual value or getting sweet deals on a new lease, so the dealer wins twice by selling a new lease and getting a low mile used car to sell. Check out what used Jeeps are selling for. Pickups too.
 
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'20 CX-5 GT PP AWD
Slightly off topic, but perhaps relevant. I have a 2020 GT PP. We just leased a 2021 CX-30 Premium for the wife. Her infotainment / nav system is much better in all respects then mine, faster and with more functions, though the traffic cam warning system seems to have sadly disappeared.

In the 2021 CX-5 is it just a larger screen, or is it the same system as the 2021 CX-30?
 
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2021 CX-5 GTR
Slightly off topic, but perhaps relevant. I have a 2020 GT PP. We just leased a 2021 CX-30 Premium for the wife. Her infotainment / nav system is much better in all respects then mine, faster and with more functions, though the traffic cam warning system seems to have sadly disappeared.

In the 2021 CX-5 is it just a larger screen, or is it the same system as the 2021 CX-30?
It is completely new. Much better in most respects other than lack of a touch screen.
 
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2021 CX-5 GTR
The market is weird recently for sure. We picked up a 2021 Signature on May 1 for 6k under invoice without trying very hard then I sold my beloved 2005 Mazda 3 (no leather, sunroof or Bose) for my asking price of $5,500 within 3 hours of posting it on Facebook Marketplace.
You paid $31K for your '21 Signature in May? Where, might I ask? The going rate for a '21 Signature (with no options) in my area - Atlanta, GA is about $37k right now (1k below invoice). Take another 750 off if you qualify for a loyalty bonus.

When I bought my '21 GTR in May (MSRP of $37,580) we paid right at 35k for it which is what Carsdirect showed as the going rate at the time (it still shows the same price today).
 
Prices can vary greatly depending on the area of the country. West Coast is typically most expensive and Florida least. It can be a huge disparity, and then every place inbetween.

I'm having second thoughts on whether the new Infotainment with 10" screen is really that important to me when I always use Android Auto and NEVER use the built in Infotainment functions. I'm thinking I might be better off waiting until lease end. Shopping trade in values to see if it's worth buying the car. Then go for a 2020 GTR with the old infotainment but slightly better screen. If the used car market is still overheating 6 months from now, the saving on the less depreciation on the 2020 is probably going to be pretty minimal over getting a new 2021 GTR. Plus I'd have the option to do the lease gain on the 2021 and hope once again the actual depreciation is less than the lease calculated depreciation.

One thing seems to be for sure, Late Fall/Early Winter of 2021 isn't probably going to have the end of model year deals like you sometimes see. I would expect most dealers will be sold out unless Mazda is keeping up with production better than the other companies.
 
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Phoenix
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2020 CX5 signature
You paid $31K for your '21 Signature in May?
Yeah, we can't say that it didn't happen, but $6,000 under Invoice seems unlikely, I did however score my 2020 Signature on April 29 of 2020 for $5,600 under MSRP, $32,494 & $598 doc - total before TT&L
 
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2018 AWD GT Premium Red/Black
When I leased my CE I still had six months left on the lease for my non-Mazda trade-in. The Mazda dealer paid off the lease and credited me almost $1000 extra. Just wild.

The average vehicle on US roads today is 12.1 years old, a record.
If true, that makes me feel better about humanity.
 
I think they meant $6K under MSRP, not invoice. And I imagine that MSRP includes destination fee ($1,100), metallic paint ($600), and sometimes they add $125 for floor mats and $400 for roof rack. $6K under invoice would be selling at a huge loss for the dealer. I would think at best they sell at net break even to pump their yearly volume totals and make their money by maximizing their client base for their Service Dept. There may be rare cases where the dealer can sell well below invoice due to end of model year clearance deals combined with various manufacturer rebates.
 
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Here's a little update. I confirmed with Mazda lease, the buy out price they are quoting includes sales tax which is 10.3% in my state which explains why the difference between the current and end of lease buy out in 7 months is much greater than my total payments as the buy out price on the contract doesn't include sales tax. So my current buy out price without tax is about $22K.

I also went to Carvana and Vroom to get trade-in prices (who I never considered that competitive on their prices because you're paying a premium for a no-haggle, no salesman purchase based on my analysis a couple years ago.) Coincidentally Carvana came in at the low end of the Black Book trade range $24,900 and Vroom came in at the high range $27,500. I would think at best if the Used Car market was pre-COVID "normal" best I would get is $24K on the trade. My gut was telling me realistically I should be able to easily get at least halfway between the low and high end of the Black Book values or about $26-$26.5K. But having that Vroom quote is a powerful tool just as long as I negotiate the new price first.

A buyer (not sure their state) got a 2021 GTR for $35K or about $1K over invoice. So let's say I can currently get $2K more on the trade than I would have in a "normal" market. If I can find a dealer that will give me the car for $1K over invoice then net cost is really $1K below due to the $2K premium on the trade. So seems like the timing is right to swap out 7 months before the lease is over assuming I can get close to these numbers. I'm going to be buying in Nevada.
 
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2021 CX-5 GTR
A buyer (not sure their state) got a 2021 GTR for $35K or about $1K over invoice. So let's say I can currently get $2K more on the trade than I would have in a "normal" market. If I can find a dealer that will give me the car for $1K over invoice then net cost is really $1K below due to the $2K premium on the trade. So seems like the timing is right to swap out 7 months before the lease is over assuming I can get close to these numbers. I'm going to be buying in Nevada.
That was me. The 35k was 1k UNDER invoice on my particular GTR (machine gray, roof rails and rear bumper guard). I am in Georgia BTW. From your offer it sounds like I should have checked with Vroom as well. I could have saved another 3k or so.
 
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'13 T & '21 Sig
You paid $31K for your '21 Signature in May? Where, might I ask? The going rate for a '21 Signature (with no options) in my area - Atlanta, GA is about $37k right now (1k below invoice). Take another 750 off if you qualify for a loyalty bonus.

When I bought my '21 GTR in May (MSRP of $37,580) we paid right at 35k for it which is what Carsdirect showed as the going rate at the time (it still shows the same price today).
Ours was dolled up with a few port/factory installed options (roof rack, front/rear facia pieces, LED door sills) bringing it to $41,400 MSRP. I offered $39k ood, which worked out to $35,400 for the car.

EDIT: Yes, sorry I got $6k off MSRP. I don't know why the two terms seemed synonymous when I made the post! Yeah that would have been a helluva deal.
 
I hate when they add those extras that are unnecessary for most buyers (LED door sills, facia, roof rack, all season mats). Typically most of those options are dealer installed not factory. I'm not sure specifically on each option for Mazda. Most brands/dealers in the past they put them on the car without the buyer's request, to inflate the MSRP. Maybe they are mostly factory installed these days, seems like the roof rack would be at least. Their cost on those extras is probably 50% the MSRP value, invoice on the car is more like 95-96% MSRP. Although there can be hidden dealer incentives to give them a bigger margin. But they definitely don't get the car for 50% MSRP, like they do the roof rack, etc. Of course there's a little labor to install the stuff. So by adding the extras to add to the MSRP on the sticker it helps bring the average overall net profit on the car up.

Most smart dealers always have a few cars in inventory with NO extras. So the MSRP is just the car MSRP and the destination charge, nothing else including a color that doesn't have a premium metallic paint charge. These cars are for the buyers that just want the lowest price and they need them to compete with other dealers that have cars with no extras. Because if the other dealer only has cars with the extras to inflate the MSRP, they can't compete on price on a level playing field with a dealer that has a few in stock that are bare bones. The cars with the extras are for the buyers that actually want them, or, the buyers that are less price-sensitive to get more profit out of them.

The floor mat thing has always driven me completely crazy. When we are about to strike a deal I always tell them, and I want the optional floor mats for free or take them out of the car. They LOVE that. LOL. The roof rack though can be handy so I usually don't have a problem with that, but I usually tell them I really didn't want that so I want it at your cost and negotiate from there. You can sort of use the optional extras against them to widdle down the price, saying you don't need or want them, if they don't have a car on the lot without them.

Many times they'll give you the extras at cost if you haggle as they'd rather give you the roof rack at cost if it makes the difference between you walking or not. Sounds like they did that for you if you got $6K off MSRP.
 
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'13 T & '21 Sig
It's a long story but honestly I'm not sad about they extra crap as I had planned on an OOD price of $38.5 and was willing to pay $500 for the extras, which yes did include the all-weather mats. And I knew roof rails were a must as the wife had them on the '13...and no installation for me.

We literally watched them back the car off the truck. I had seen they had this one online without a pic so I suspected it was incoming and happened to have just arrived when we visited the dealer.