New Jersey stands to take in more revenue from vehicle taxes as used car prices rise
(The Center Square) – An increase in the price of used cars could put another $170.93 per vehicle sold in New Jersey’s coffers, according to a calculation of statistics from the National Automotive Dealers Association.
The price of a used car increased by $2,580 in New Jersey from March 2020 to March 2021. New Jersey’s sales tax on a used car is 6.625%.
New Jersey saw the second-lowest increase in the 50 states with an 11.8% rise. Vermont had the lowest percentage increase with a 10.7% jump of $2,717 in the sales price. The price of a used car in neighboring New York state increased by 13.7%, an overall $3,126 jump.
The national average price of a used car increased by $3,926, which is 16.8% more than the 2020 price.
Consumers drove very little during 2020 as pandemic restrictions led to at-home work and school. They also had little interest in purchasing a new or used car. But sales numbers could be different from reported as the closure of state offices led to delays in registering car sales, according to Todd Campau, associate director of Aftermarket Solutions at IHS Markit.
Researchers at IHS Markit said in a news release the current average age of a car is 12 years. A global chip shortage is driving the price of used cars higher as manufacturers curb the production of new cars. This leads to more interest in used cars.
“The microchip shortage and subsequent inventory levels for new vehicles have created a situation in which used vehicle values have gotten extremely high, so a vehicle owner who may have kept a vehicle in the garage that they were not using in 2020, now instead may take advantage of the opportunity to either reduce the number of vehicles in their garage, or trade up to something newer while the demand and value is extremely high on their used vehicle,” Campau said. “This is great news for the aftermarket as subsequent vehicle owners typically have a higher propensity to use independent repair shops for necessary maintenance and repair.”
Luxury and sport vehicles were the top-selling used cars in May, according to an analysis by iSeecars.com. The Mazda MX-5 Miata priced at $25,009 topped the list followed by the Tesla Model and Chevrolet Corvette.
The average sale time of a used vehicle is 39.4 days and the fastest-selling vehicles are sold within 25 days, according to the analysis by iSeecars.com
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