If you are a used car shopper, you can rest easier knowing that prices are falling. The falling prices are not a new development, either. Average used vehicle prices are in the third month of decline, and new vehicle production is hampered by supply issues. However, the prices aren’t falling by much, and they are still way up from this time last year. Also, experts at Cox Automotive estimate that prices are unlikely to fall back to pre-pandemic levels. So, should you rush out and buy a used car now?
Are used vehicles very expensive right now?
In short, yes, used cars are quite expensive right now. Supply chain issues and material shortages have led to raised prices for both new and used vehicles. Automakers are producing cars with reduced options due to semiconductor chip shortages, and that is when buyers can get a new vehicle at all.
Furthermore, supply chain follies have prevented dealerships from getting new inventory. Consequently, dealers are stacking their inventories with used vehicles from recent model years. For example, dealerships’ used car inventories are up 15% for 2019 models and 22% for 2020 models. Some consumers state that dealerships are reaching out to them based on previous sales in an attempt to buy back their vehicles.
Are used car prices dropping?
What goes up must come down, and used car prices are no different. CNBC reports that the Manheim Used Vehicle Value Index, which Cox Automotive uses to track price changes, is reflecting some good news. Specifically, costs dropped 1% from April to March. While that may not seem like much, it represents some of the continued improvements after the record highs of January.
The trend of used vehicle depreciation is exciting, but there is still a long way to go
Although used car prices reflect the latest in a three-month recovery period, the Manheim Used Vehicle Value Index shows that values are still up 14% over wholesale costs from 2021.
Consequently, Cox Automotive attributes some depreciation to a lowered demand in the face of high prices. Specifically, the Manheim Index estimates that retail sales of vehicles dropped by 13%. That decline supports Cox Automotive’s suggestion that demand is easing.
However, consumers should not expect prices to fall back down to the level of previous years. Cox Automotive told CNBC that used cars will likely return to more consistent patterns, but remain elevated overall.
While it might be tempting to rush out and buy that used car you’ve been waiting for, you might want to wait just a bit longer
Even if you have been patiently waiting for prices to fall to buy a used vehicle, you might consider holding off. If used car prices continue to trend downward, shoppers might snag a cheap car bargain, albeit not at prices like years past. Scroll down to the following article to read more about our wild and crazy car market.