Used Car Prices Are Falling Again… For Now
Prices aren’t going back to pre-pandemic levels anytime soon but at least they’re going down.
Used car prices have been coming down, after being at record highs during the Covid-19 pandemic, but they haven't reached pre-pandemic levels yet. While they won't get that low anytime soon, it seem that used car prices will come down again in the coming months, as wholesale car prices are the lowest they've been all year.
According to the Manheim Used Vehicle Value Index, May's wholesale auction prices—which is what used car dealers pay for their inventory—were down 2.7% from April, the second consecutive month-to-month drop. Not only that but they were down 7.6% from May of last year, showing a slow but steady decrease year-to-year. While that decrease isn't linear, and there are small raises some months, the curve is headed downward.
When wholesale used car prices go down, retail prices typically follow. It might take between six and eight weeks but we should see another drop in retail used car prices. However, don't expect pre-pandemic prices in the foreseeable future.
“Taking a longer view, May’s year-over-year decline accelerated from April and March; however, the rate of decline might slow over the next several months as we encounter the lower prices seen at auction from May through November last year. Two consecutive reads in either measure do not a trend make, as used retail inventory is still below last year, and that tends to keep buyers at the auction, supporting prices," said Chris Frey, senior manager of Economic and Industry insights for Cox Automotive.
I think it's fair to see that we're all sick of grossly high car prices, new or used. Customers have been getting the short end of the car buying stick since the pandemic, as used car prices are up and it seems like you can't get any new car without paying dealer markups. Hopefully, we're seeing some light at the end of the tunnel.
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