Used car sales seem to be finally returning to normal patterns after years of disruptions, with signs of stability found in lower prices in multiple categories of used vehicles, recent commerce data indicates.
Edmunds describes the signs of returning stability as “encouraging” in its Used Vehicle Report, following years of automotive market turmoil after the COVID-19 pandemic and ensuing supply chain issues.
According to the study’s findings, average transaction price or ATP of used vehicles fell by 5.5 percent in Q3 2023 compared to the same quarter a year ago. As recently as August, used cars priced at under $20,000 had shrunk to just 12.4 percent of those on offer, rather than 49.3 percent in 2019, so the falling prices do seem to be moving the used car market in the direction of historic norms.
Another key indicator, the price difference between new vehicles and almost-new used vehicles, is growing larger. Ordinarily, even small amounts of use cause a new vehicle’s price to drop significantly, but a “nearly-new” used car costs almost as much as its showroom counterparts during recent auto market disruptions. Now, there is an average $13,686 price difference between and under-3-year-old used car and the same model brand new. For September 2023, used cars up to 36 months old or newer saw prices fall 4.8 percent year-over-year.
However, not all signs point to a rosy picture for a stable pre-pandemic used car market’s return. Demand continues to be extremely high, with pre-owned vehicles snapped up rapidly as soon as they come on the market. This continues to have several important consequences on price and availability.
High demand is keeping prices pumped higher for the sector, to the tune of roughly $10,000 higher cost for a given age and mileage combination in 2023 as compared to 2019. Additionally, because newer, lower-mileage vehicles are bought up quickly, the average used offering today is considerably older and has notably higher mileage than was the case four years ago.
However, the director insights at Edmunds, Ivan Drury, still struck an overall note of optimism, observing that “both dealers and consumers should benefit from the lessening of market turbulence as pricing and transacting can be handled with less risk.”
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November 25, 2023 at 08:35PM
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Used Car Market Showed Signs Of Return To Normalcy In Q3 2023 - GM Authority
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