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No, That Crazy Price Carvana Offered For Your Car Isn’t Too Good To Be True

An eight-year-old Tacoma selling for above its original sticker price. An instant cash offer thousands of dollars above the lease buyout price of a Mazda 3. A mainstream used car bought three years ago, now worth more than it was purchased for. It’s not a fluke, it’s not just Carvana or Vroom, and it’s not going away anytime soon. This is what the used car market looks like in 2021.

The strangeness is most visible on social media, where it’s easy to find reports of online-only retailers like Carvana and Vroom offering stratospheric buyout prices for everyday used cars. Often prices for extra-hot used vehicles, like the Jeep Wrangler and Toyota Tacoma, approach or exceed the suggested retail price for their new counterparts. Clearly, one might naturally assume, someone is losing money here. “Disrupting” the market by burning investor cash is a classic Silicon Valley play, one that defined the rise of Uber. It wouldn’t be surprising to see online retailers using COVID-19-related market shifts and piles of VC money to gobble up market share while taking substantial losses.

Yet that’s not what’s happening. It may defy surface-level logic and stun onlookers, but the trade-in values and used car prices at online retailers aren’t outliers.

“The market is absolutely on fire,” Jonathan Banks, J.D. Power vice president and general manager of vehicle valuations, told Road & Track. “Dealers are going to pay you perhaps even more, depending on where you’re at. Especially if you have a Tacoma. Gosh, if you have a Tacoma it’s like a gold mine. Your Tacoma, your Wrangler, your F-150, dealers are going to pay you top-dollar price as well. So this is not a Carvana phenomenon.” For the full story, check out this article from Road & Track.

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