If you are planning to shop for used cars in the near future, there’s some good news on the way. As most buyers are aware, the market for used cars has been in a difficult place for the last few years. The pandemic and lockdowns delivered a heavy blow to car buyers as they watched prices for used cars hit new highs.
Skyrocketing Prices Make Things Difficult
Between January 2021 and January 2022, the prices for used cars and trucks rose an average of 40.5%. The skyrocketing prices were primarily due to difficulties in the supply chain that impacted the market for new cars. This brought a lot more buyers into the used market, which then saw soaring demand and not enough supply to mitigate it.
However, that was then, and this is now. Car buyers can finally breathe a sigh of relief going into the summer of 2023. The data for used cars now show that wholesale prices in the United States have fallen 4.2% as of June. Meanwhile, prices for used cars in the retail sector have fallen over 10% in the first half of the year. In fact, used car prices have been going down for the last three months.
The reason? Primarily, it’s that global supply chains are finally stabilizing, which means that parts and vehicles are moving at a faster rate than earlier in 2023.
More Balanced Inventory
Right now, the outlook for both new and used cars looks good. For the first half of 2023, the market could only be described as volatile. The result isn’t exactly unexpected. There were some big upswings for the market at the start of 2023, and then a downswing in March. The back and forth has brought the market to a roughly expected place at the halfway point in the year.
The good news is that the worst of the automotive market is likely in the rearview mirror. Retail sales for used cars stayed steady in June and are showing signs of increasing in the coming months. The inventory is now in a promising place where it’s balanced between supply and demand.
Sports cars declined in price the most, down 14.8% between June 2022 and June 2023. Truck and van prices went down by as much as 6.8% in the same time period. Compact and midsize sedans fell by up to 6.7% in that time.
Expectations Are Good
In general, car buyers should expect to see prices go down as the supply chain recovers. The demand for used cars is trending low right now, so that should also help prices go down. In fact, that was actually predicted in late 2022. Rising interest rates and high prices began to cut demand for used cars back in 2022.
In October 2022, experts advised waiting at least six months to buy used cars, citing high prices and low inventory. That advice turned out to be largely true, as just over six months later, the prices are finally starting to even out as the inventory also becomes more balanced.
The bottom line is that if you’re looking for a used car right now, you should start seeing lower prices and more to choose from.
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