Lexington, Kentucky (Fox 56) – Many Kentuckians are shocked by used car stickers.
Each year, the expectation for the value of cars, and taxes along with them, to change is “a little,” but “a little” has turned out to be “a lot.”
“This was an unexpected outcome coming from COVID-19,” said David O’Neill, Fayette County’s director of property appraisal.
According to O’Neill, the cost of new brands and selected vehicle models jumped nearly 40% higher in 2022.
As of the new year, the price of a used car is equal to the price of a new car. This was determined by the J.D. Powers Guide, which calculates averages based on vehicle sales across the country.
“Since demand didn’t go down, people still needed a car, the value of used cars went up dramatically,” O’Neill said.
However, O’Neill said that Kentuckians “did not expect an increase of up to 40%-60%.”
Don Franklin’s director of sales, Stephen Johnson, said, “To put that in the dollar value, a $20,000 used car is now worth $27,400.”
And as the supply of new cars plummeted, another effect of the pandemic, the value of all used cars soared.
“My wife’s GMC Canyon is worth more now than she did when she was new a year ago,” Johnson said.
At the end of the business, Don Franklin Auto Center saw another big drop in its inventory.
Don Franklin CEO Eddie Thompson said, “In a typical year, we’d have six to seven hundred new vehicles on display here at the Auto Center, and I have 60 to 70 right now, which is about 10% of what we typically own.”
The demand for cars has not decreased. Thompson said those 70 cars would be gone in seven days.
Don Franklin’s also had to adjust the way they did their business.
“So there’s a lot more pre-sales, online sales, and vehicle locating to customers than we did before just because of a lack of inventory,” Thompson said.
Thompson also mentioned that they had to buy cars with more miles on them. Rental companies are now handing over cars that were 60,000 to 70,000 miles in length when they used to see 20,000 to 30,000 miles.
In response, both the House and Senate have proposed bills to give cars a fair monetary rating.
House Bill 6, introduced by Republican Representative Patrick Flannery and several other House members, proposes using a different standard to arrive at a car’s value. In addition, for those who paid for their car cards before the price hike, these car owners can apply for a refund of their overpayment.
Senate Bill 75, introduced by Republican Senator Jimmy Higdon, proposes that prior year assessments of vehicle values and tax rates apply in 2022 and 2023.
O’Neill also recommended that the benchmark valuation be deferred to what was set two years ago until the market stabilizes.
“I think the legislature should work on what is the solution that satisfies both the law and the constitution,” O’Neill said.
At a press conference on January 10, Governor Andy Beshear exposed rumors circulating on social media that he and his administration were responsible for increasing auto tax rates.
This administration has not raised car tax rates. The executive branch cannot increase tax rates. “This is being done by the legislature,” Bashir said. “What happened is that your car is worth more. Just as when your home appreciates, it is worth more. The tax rate is a percentage of the total value of the profit. Right now, there is such demand for used cars that the value has increased rather than decreased as it did in The last two years. Right now, you can get the most money for your used car that we’ve seen in the last 10 years.”