Used Car Prices Look Encouraging After 2023 Q3 Sales
- Used car prices dropped 5.5% year-over-year
- Used EV prices 4.8%
- On average, used cars still cost $10k more today than in 2019
Used car prices have been one of many things that have felt – well, off over the past few years. We have had some moments where it seemed like prices were dipping, and often they did, just not enough to alleviate the stress on the market. However, the Q3 Used Vehicle Report shows real signs that we are moving toward a more stable (cheaper) used car market. Interestingly, this study is getting repeated across bigger chunks of the used car market.
Are used car prices finally coming down?
According to the Edmunds study, the used car market is finally getting a bit of course correction on the insanity of used car prices and availability from the past couple of years. One of the first clues is that used car prices dropped 5.5% year-over-year. At the risk of being a wet blanket, 5.5% is a good start, but it nowhere near makes up for the cartoonishly high prices we’ve seen (and paid) since the COVID supply chain issues. But it is a step in the right direction.
“Q3 showed signs of a return to normalcy in the used car market, albeit at still-elevated prices,” said Ivan Drury, Edmunds’ director of insights. “Both dealers and consumers should benefit from the lessening of market turbulence as pricing and transacting can be handled with less risk that a vehicle’s value will move sharply in either direction over a short period — as was happening throughout the past few years.”
Is it smart to buy a used car yet?
Used cars still aren’t “cheap.” Prices are still absurdly high. That said, there is movement. The study found that improved inventory in the new-car market has relieved the demand on the used market, leaving the average price for 3-year-old and newer used vehicles $13,686 below the average price of new cars in Q3 2023. For reference, in Q1 2022, the difference was only $8,950.
Used EV prices are dropping like stones. New electric cars have seen a drop in demand, making used electric car prices (three years older) drop by 4.8%. However, EVs specifically have suffered a considerable 29.5% value drop overall.
Although new car production is correcting, people still over spent on used cars for the last two years. As prices fall, people can’t sell their overpriced used cars for fear of losing too much money. As a result, the used car market is still fairly light in inventory. Even with all the good news about prices coming down, a used car shopper today will still spend, on average, $10k more than the same car with relatively the same age and mileage in 2019. That still stings a bit.
“Anyone attempting to compare today’s used car market to the ‘Before Times’ will likely wince at current values, but stability is nonetheless an encouraging sign,” Drury said. “In the short term, consumers who have been on the fence should approach a used car purchase with more confidence knowing the auto industry has moved past its most significant production pipeline challenges to catch supply up to, and even surpass, demand.”
Will used cars ever go back to the way they were before COVID?
We will likely never go back to the way things were in the before times. House prices, car prices, politics, work from home, etc., are only a few of the major changes from the COVID times. Most experts and analysts don’t foresee us getting back to the old days. The world seems to have moved on from 2019, and not only is it not looking back, it ripped the rear-view mirror off, tied a brick to the throttle pedal, and turned up the radio, closing its eyes. Even still, used car prices are coming down, and even if it’s only a little, a little is something, and something is better than nothing.