![]() Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Chicago Mercantile: Certain market data is the property of Chicago Mercantile Exchange Inc. US market indices are shown in real time, except for the S&P 500 which is refreshed every two minutes. Your CNN account Log in to your CNN account That drop in the value of trade-ins could also be a headwind on car prices by reducing what buyers are able to pay. Edmunds shows the average trade-in value in December down nearly $3,000, or 11%, to $22,605, from the record high hit in June of 2022. This is obviously good news for those wanting or needing to buy a used car, though it can have a negative effect on car buyers by reducing the value of vehicle they hope to trade in. Now it’s a factor helping to bring down the pace of inflation, shaving more than a third of a point off the overall rate in December. The run-up in used car prices was a major driver in the nation’s overall inflation rate, adding about a full percentage point to the overall increase in consumer prices from April of 2021 through May of 2022. GM is the top car seller in America, retaking the title from Toyota (Photo by Justin Sullivan/Getty Images) Justin Sullivan/Getty Images General Motors lowered its profit forecasts citing higher steel and aluminum costs due to tariffs imposed by the Trump administration. Because of that, “I don’t think we’re getting down to 2019 levels,” he added.ĬOLMA, CA - JULY 25: A Chevrolet Malibu is displayed at a Chevrolet dealership on Jin Colma, California. ![]() “The supply issue is still grim,” said Markus. One thing that could put a floor under the used car prices: late model used cars will likely be in short supply given the reduced new car production over the last three years. There could be more declines in used car prices in the months ahead, as new car inventories continue to build. “There was nowhere for these prices to go but down,” said Markus. And with more buyers finding the new cars they want, that means lower demand for used cars.Įxperts say part of the decline in used car prices is that the price increases were not sustainable and were partly driven by buyers at used car auctions overpaying for the limited supply of used vehicles. Overall, sales were up 9% in the fourth quarter compared to a year ago, and nearly 6% higher than in the third quarter, according to Cox Automotive. Automakers are reporting more supplies of the chips they need, and are producing and selling more cars, including a return of fleet sales. With limited inventory of cars to sell, automakers essentially stopped making lower-priced fleet sales, and even rental car companies were forced to turn to the used car market.Īll that has started to change in recent months. That included rental car companies, which before the pandemic normally bought about 10% or more new cars per year. “At one point it seemed that everyone who was going to buy new ended up buying used,” said Greg Markus, executive vice president of AutoLenders, parent company of New Jersey’s largest used car dealership chain. The low supply of new cars caused an even bigger jump in the average price of used cars, as buyers who would otherwise buy new vehicles turned to the used car market. Parts shortages, especially for computer chips, had choked off production of new cars in much of 2022, causing the lowest level of full-year US new car sales since 2011. It was the lack of new car inventory that drove up prices. (KMX), the nation’s largest pure used car dealer, has warned that the combination of high prices and high interest rates is creating an affordability problem for many buyers, hurting overall demand.īut the leading reason for the drop in used car prices is the increased supply of new cars. While the prices of late model used cars are down only 5% off their peak according according to Edmunds, the price of older used cars, those five years or older, have fallen 15% or more from their peaks early in 2022.Įxperts say reasons for the decline include higher interest rates that make it more expensive to finance a car purchase, limiting demand. Today’s average used car price is about the same as the average new car price as recently as 2010. Data from Edmunds shows the average price of a used car purchase in December at $29,533, down nearly $1,600 from the record high of $31,095 reached in April 2022.
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