LEXINGTON, Ky. (FOX 56) — Many Kentuckians are feeling used car sticker shock.
Each year, the expectancy for the value of cars, and the taxes along with them, to change is just “a little,” but “a little” has turned into “a lot.”
David O’Neill, Fayette County’s Property Valuation Administrator said, “This was an unforeseen consequence coming from COVID-19.”
As of the new year, the price of a used car is worth just as much as a new one. That has been determined by the JD Powers manual which calculates averages based on car sales around the country.
“Since the demand didn’t go down, people still needed a car, the value of used cars went up significantly,” O’Neill said.
However, O’Neill said Kentuckians, “did not expect an increase as high as 40% – 60%.”
Don Franklin Sales Manager, Stephen Johnson, said, “To put that into dollar value, a used car that’s $20,000 dollars is now worth $27,400.”
And with the supply of new cars being low, another impact of the pandemic, the value of all used cars have appreciated in value.
“My wife’s GMC Canyon is worth more now than when it was new one year ago,” Johnson said.
On the business end, Don Franklin auto mall has seen another significant drop in its inventory.
Don Franklin Executive Manager, Eddie Thompson, said “In a normal year, we would have six to seven hundred new vehicles on display here at the auto mall, and I have 60 to 70 right now, which is about 10% of what we normally have.”
The demand for cars has not dropped. Thompson said those 70 cars will be gone in seven days.
Don Franklin’s has also had to adjust the way they do business.
“So it’s a lot of pre-selling, online sales, and locating vehicles for customers more so than we did before just because of lack of inventory,” Thompson said.
Thompson also stated that they had to acquire cars with more mileage on them. Rental companies are now turning over cars with 60 to 70-thousand miles on them when they used to see 20 to 30-thousand miles.
As a response, the House and Senate have both proposed bills to give cars a fair cash evaluation.
House bill 6, filed by Republican Rep. Patrick Flannery and several other House members, proposes a different standard be used to arrive at the value of a car. Additionally, for those who paid for their car tags prior to the rates rising, those car owners can apply for a refund for their overpayment.
Senate Bill 75, filed by Republican Sen. Jimmy Higdon, proposes that the previous year’s evaluations of car’s values and tax rates be applied in 2022 and 2023.
O’Neill also recommended for the standard evaluation defer to what was set two years ago until the market stabilizes.
“I think the legislature is going have to work at what that solution that satisfies both the statute and the constitution,” O’Neill said.
In a news conference on Jan. 10, Gov. Andy Beshear debunked rumors circulating on social media that he and his administration were responsible for the vehicle tax rates increase.
“This administration has not increased vehicle tax rates. The Executive Branch cannot increase tax rates. That is done by the legislature,” Beshear said. “What has happened is that your car is worth more. Just like when your house appreciates, it’s worth more. The tax rate is a percentage of the overall profiting value. Right now, used cars are in such demand that value as opposed to depreciating like it has in the past couple of years has increased. Right now, you can get the most money for your used car that we have seen in the last ten years.”