Teens Find Rising Used-Car Prices Dash Hopes of First Car

Buying a used car, or receiving one from parents, has long been a rite of passage for generations of young drivers in the U.S. Skyrocketing prices and a shortage of preowned inventory are adding new strains to a teen’s initiation into the driving world, prompting some shoppers to delay purchases and others to stretch their budgets.

Used-car prices were rising before the pandemic hit, but in the past two years, they have consistently hit more records as supply-chain disruptions have slammed the auto industry, leading to a shortage of cars new and used.

The average listing price for a preowned model hit $28,500 in January, a 31% jump over the same prior-year month, according to Cox Automotive. Comparatively, new-vehicle prices rose 12% during that same time frame, the firm’s data shows.

The surge has walloped price-sensitive buyers, especially younger ones, who have reliably turned to the used-vehicle market for more-affordable options, analysts say.

The number of 16-to-25-year-olds purchasing a used vehicle dropped 35% between 2019 and the end of 2021, more than for any other age group, according to data provided by research firm J.D. Power.

Purchases of new cars also have slipped for this age group over the past couple of years, the firm’s data shows.

While Gen Zers had been showing more interest in automobiles before the health crisis, they are now being held back by the rising prices and paltry selection of low-cost vehicles, analysts and industry executives say.

“As an industry, I think there should be some concern,” said Jack Hollis, senior vice president of auto operations at Toyota Motor North America.

Capturing younger buyers, who will be the driving force behind the economy in the next 20 to 40 years, is critical for the car business because it ensures brand loyalty and a future customer base, Mr. Hollis added.