For the second straight year, used-vehicle prices are skyrocketing nationally.
Among the hardest-hit spots? Alaska. Cars that fetched $15,000 before the pandemic now sell for around $23,000, after Alaska prices spiked more than 50% since 2020, according to federal data.
The surging costs sharply outpace other commodities amid widespread national inflation. And they’ve turned the Alaska car market upside-down.
Used vehicles can sell for more today than they did two years ago — unheard-of before the pandemic, sellers say. And with supply low, it can take months to find a car. Many buyers say they’re paying thousands of dollars more than they hoped on high-mileage cars and trucks.
Barbara and Marty Leichtung flew to Anchorage from Homer, where they live, to find the car they needed, a 2016 Honda CRV they’d found on an earlier trip. They picked it up last week, after Continental Honda needed time to do maintenance work on it.
The couple paid about $27,000, said Marty Leichtung, a retired North Slope oil field worker.
The car would have sold for less than $20,000 before the pandemic, a salesman said.
“That’s a lot of money for a 2016 car, but that’s the market these days,” Leichtung said.
Auto dealers say the problem is rooted in the limited supply of new cars, underscored by empty showrooms at dealerships.
Delays in the manufacturing and shipping of microchips and other automotive parts, caused by the COVID-19 pandemic, continue to reduce the availability of new vehicles, they say. That has reduced the number of vehicles that once replenished the used-car market in Alaska.
“It’s a direct impact from COVID,” said Jose McPherson with Good Guys Auto Sales in downtown Anchorage. “It’s supply chain issues. It’s the lack of microchips and raw materials to make cars. It’s the lack of individuals to produce the products. It’s kind of a perfect storm, unfortunately.”
With new cars hard to buy — they need to be ordered months in advance — car rental companies and individuals hold on to their existing vehicles, further reducing supply, McPherson and other dealers said.
Dealerships, getting fewer trade-in vehicles, say they are increasingly buying cars at highly competitive Lower 48 auctions. Add auction fees and the costs to ship the car to Alaska, and sticker prices can rise well above listed prices in Kelley Blue Book and other guides, they say.
The prices are turning some buyers away, McPherson said last week over the phone as he placed bids at an online used-car auction in Washington state.
“The prices are high, but it’s not because I want to make a mint on every car,” McPherson said last week. “It’s because I’m paying a mint for a car.”
On the other hand, people with a car to sell can get good deals.
This spring, Wasilla resident Sean Fitzpatrick traded his 2018 Ford Edge SUV to an Anchorage dealer for $24,500. That was $500 more than he’d paid for it two years ago, after he put 50,000 miles on it.
“That was a huge shock to me, because it had 85,000 miles when I sold it,” he said. “And it had cosmetic damage, door dings, a crack in the windshield and tail light.”
Cars that get so much wear and tear don’t normally rise in value, he said.
“This market is pretty frickin’ ridiculous right now,” said Fitzpatrick, who commutes from Wasilla to Anchorage to work for the Alaska Department of Corrections.
In return, Fitzpatrick bought a 2020 Nissan Maxima for $30,000, a decent price, he said. It was the full-size sedan he wanted.
But it took nine months to find it.
“There just weren’t a lot of options,” he said. “I think I came across maybe nine vehicles in the category I was searching for, and most had 50,000-plus miles or cosmetic issues.”
Others aren’t so lucky.
Amanda Toorak, a city employee in the Northwest Alaska village of Kaktovik, paid close to $36,000 for a 2015 Jeep Wrangler in May. It had 70,000 miles on it, she said. She found it after a month of searching in Fairbanks and Anchorage.
“It’s pretty crazy how high the prices are now,” she said. “I mean if I knew the prices would be this high, I would have purchased a car a couple of years ago and it could have been $20,000 less.”
Toorak said getting her car to the village will require a barge shipment across the Arctic Ocean, adding more than $4,500. But she needs the Wrangler to haul supplies and relatives to the beach for whale hunts that could start in August.